OpenMarkets Education

Glossary

AGMThe Annual General Meeting provides an opportunity for shareholders to view company accounts, hear from key stakeholders, elect directors and vote on company-related issues.
AlphaThat portion of an investment return above market return, generally created through active portfolio management.
Authorised capitalThe total amount of capital a company is authorised to raise from the public – it should reflect the company’s future capital needs.
Bank bill rateThe bank bill interest rate is the wholesale interbank rate within Australia and is widely used as the benchmark interest rate for financial instruments.
Basis pointOne hundredth of one percent and is often used to express movements in interest rates – a 25 basis point change is equivalent to 0.25%.
Bear marketA market in which share prices are falling; volumes generally dwindle as prices decline.
BetaMarket return
Blue chipA share in a company recognised for its ability to make profits and pay dividends, generally a big-name brand. ASX50 companies are considered blue chip.
BonusA free issue of shares to shareholders on a pro-rata basis – for example, three new shares for every share held.
BrokerageA broker’s fee for buying or selling shares for a client.
Bull marketA market in which share prices are rising; volumes increase as prices rise.
Capital baseA company’s issued capital.
Capital gain/lossGains or losses that arise from selling securities.
Capital raisingThe issue of debt or equity securities to raise money.
Closing priceThe price quoted at the end of a day’s trading.
Contract noteDocument that verifies the details of transactions made through a broker.
CrossingWhen a broker matches a buyer and seller of a specific stock, and both are clients of broker’s firm.
DelistedA formerly listed company whose securities are no longer quoted on an exchange.
HedgingA strategy to protect assets by minimising risk; futures and options contracts may be used to minimise the risk of capital loss.
Market capitalisationThe total value of a company’s issued capital.
Net asset backingTotal shareholder’s funds in a company, less liabilities, divided by the number of shares on issue.
Net asset value (NAV)Total assets of a company or fund, less total liabilities.
Net tangible assets (NTA)Total assets of a company less total liabilities, not including intangible items such as goodwill or trademarks.
Off market offerA takeover bid made directly to shareholders, not via an exchange.
Over the counter (OTC) optionsOptions that are not traded on an exchange.
Paid up capitalThe proportion of a company’s capital that has been paid for by shareholders.
Rights issueAn offer to shareholders to purchase additional shares, usually below market price and at a predetermined ratio.
SettlementThere are two steps in the settlement of trades:
> payment is made electronically
> legal ownership of the security is transferred to the buyer
Settlement occurs automatically two business days after a trade takes place – otherwise known as T+2.
Short sellingThe sale of a security that is not owned; the expectation is that the price will fall so it can be bought in the future at a profit.
SplitDividing a company’s shares into a greater number of units by reducing the par value of each share.
Stop lossAn investor’s instruction to a broker to sell if and when a stock falls to a certain price level; this limits the loss on the investment.
Unlisted securitiesSecurities that are not listed on an exchange.
VolumeThe aggregate value or number of securities traded during a specific period.

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