Bid price

This is a price which is offered for a commodity, service, or contract. It is colloquially known as a “bid” in many markets and jurisdictions

Bid size

This represents the quantity of a security that investors are willing to purchase at a specified bid price.

Block trade

This is the sale or purchase of a large number of securities. A block trade involves a significantly large number of equities or bonds being traded at an arranged price between two parties.

Bear market

This is when a market experiences prolonged price declines.

Broker-dealer

This is a person or firm in the business of buying and selling securities for its own account or on behalf of its customers.

Broker

This is an individual or firm that acts as an intermediary between an investor and a securities exchange.

Brokerage Company

Their main duty is to act as a middleman that connects buyers and sellers to facilitate a transaction.

Brokerage fee

This is a fee charged by a broker to execute transactions or provide specialized services.

Bull

This is an investor who thinks the market, a specific security or an industry is poised to rise.

Bull market

This is the condition of a financial market in which prices are rising or are expected to rise.

Buy and hold

This is a passive investment strategy in which an investor buys stocks or other securities and holds them for a long period regardless of fluctuations in the market.

Buy limit order

This is an order to purchase an asset at or below a specified price, allowing traders to control how much they pay.

Buy stop

This is an order instructs a broker to purchase a security when it hits a strike price that is higher than the current spot price.

Buy the dips

This refers to purchasing an asset after it has declined in price.

Buyback

This also known as a share repurchase, is when a company buys its own outstanding shares to reduce the number of shares available on the open market.

Buyer’s market

This refers to a situation in which supply exceeds demand, giving purchasers an advantage over sellers in price negotiations.

C

Capital gain

This is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price.

Capital markets

These are venues where savings and investments are channeled between the suppliers who have capital and those who are in need of capital.

Cash dividend

These are funds or money paid to stockholders generally as part of the corporation’s current earnings or accumulated profits.

Clearing

This is the procedure by which financial trades settle – that is, the correct and timely transfer of funds to the seller and securities to the buyer.

Clearing House

This acts as an intermediary between a buyer and seller and seeks to ensure that the process from trade inception to settlement is smooth.

Common stock

This is a security that represents ownership in a corporation. Holders of common stock elect the board of directors and vote on corporate policies.

Consumer Price Index (CPI)

This is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Currency exchange

This is a business that has the legal right to exchange one currency for another to its customers.

Cum dividend

This describes a stock that is trading with the value of the next dividend payment.

Central Securities Clearing System (CSCS)

This is a financial market infrastructure and central securities depository that holds securities centrally in a dematerialised form.

Cyclical stock

This refers to an equity security whose price is affected by macroeconomic, systematic changes in the overall economy.

D

Day order

This is a direction to a broker to execute a trade at a specific price that expires at the end of the trading day if it is not completed.

Day trader

This is a trader who executes a large volume of short and long trades to capitalize on intraday market price action.

Defensive

This stock is a stock that provides consistent dividends and stable earnings regardless of the state of the overall stock market.

Delisting

This is the removal of a listed security from a stock exchange.

Divestment

This is the process of selling subsidiary assets, investments or divisions in order to maximize the value of the parent company.

Dividend

This is the distribution of a portion of the company’s earnings, decided and managed by the company’s board of directors, and paid to a class of its shareholders.

Dividend payout ratio

This is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company.

Dividend per share

This is the sum of declared dividends issued by a company for every ordinary share outstanding.

Dividend yield

This is the ratio of a company’s annual dividend compared to its share price.

E

Earnings

This refers to after-tax net income, sometimes known as the bottom line or a company’s profits.

Earnings announcement

This is an official public statement of a company’s profitability for a specific time period, typically a quarter or a year.

Earnings per share (EPS)

This is calculated as a company’s profit divided by the outstanding shares of its common stock.

E-dividend

This is digital-based system that facilitated the distribution of a portion of the company’s earnings, to shareholders.

Equity

This represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debt was paid off.

Equity market

This is a market in which shares are issued and traded, either through exchanges or over-the-counter markets.

Ex-dividend

This is a stock that is trading without the value of the next dividend payment.

Exchange-traded fund (ETF)

This is a type of security that involves a collection of securities—such as stocks—that often tracks an underlying index, although they can invest in any number of industry sectors or use various strategies.

F

Face value

This is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer.

Fair market value

This is the price that a prospective buyers and sellers with reasonably knowledgeable about the asset are willing to execute the transaction.

G

Going concern

This is an accounting term for a company that has the resources needed to continue operating indefinitely until it provides evidence to the contrary.

Growth stock

This is a share in a company that is anticipated to grow at a rate significantly above the average for the market.

H

Holding period return

This is the total return received from holding an asset or portfolio of assets over a period of time, known as the holding period, generally expressed as a percentage.

I

Iceberg orders

These are large single orders that have been divided into smaller limit orders, usually through the use of an automated program, for the purpose of hiding the actual order quantity

Index

This measures the performance of a basket of securities intended to replicate a certain area of the market, such as All Share Index

Inflation

This is a quantitative measure of the rate at which the average price level of a basket of selected goods and services in an economy increases over some period of time.

Initial public offering (IPO)

This refers to the process of offering shares of a private corporation to the public in a new stock issuance.

Interim dividend

This is a dividend payment made before a company’s annual general meeting (AGM) and the release of final financial statements.

Investor

This is any person or other entity who commits capital with the expectation of receiving financial returns.

Investment

This is an asset or item acquired with the goal of generating income or appreciation.

Investment policy statement (IPS)

This is a document drafted between a portfolio manager and a client that outlines general rules for the manager.

J

Joint account

This is a brokerage account that is shared owned by two or more individuals.

L

Lien

This is a claim or legal right against assets that are typically used as collateral to satisfy a debt.

Limit down

This is price is the maximum allowable decline in the price of a stock or commodity in a single trading day.

Limit order

This is a type of order to purchase or sell a security at a specified price or better.

Liquidating dividend

This is a type of payment that a corporation makes to its shareholders during a partial or full liquidation.

Liquidity

This refers to the ease with which an asset, or security, can be converted into ready cash without affecting its marker price

Listed security

This is a financial instrument that is traded through an exchange, such as the NSE

M

Market-on-close

This order is a non-limit market order. A trader executes an MOC order as close to the end of the market day as possible.

Market order

This is a request by an investor – usually made through a broker or brokerage service – to buy or sell a security at the best available price in the current market.

Market price

This is the current price at which an asset or service can be bought or sold.

Market risk

This is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved.

Market value

This is the price an asset would fetch in the marketplace, or the value that the investment community gives to a particular equity or business.

N

Net worth

This is the value the assets a person or corporation owns, minus the liabilities they owe.

New issue

This is a reference to a security that has been registered, issued, and is being sold on a market to the public for the first time.

Nigerian Stock Exchange (NSE)

The sustainable stock exchange championing Africa’s growth – was established in 1961 as the Lagos Stock Exchange. In 1977, its name was changed from the Lagos Stock Exchange to the Nigerian Stock Exchange. It is a multi-asset Exchange with 166 equities, 154 bonds, 9 Exchange Traded Funds (ETFs), and 53 memorandum listings with a total market capitalisation of over ₦28 trillion as at January 9, 2019.

O

Order

This is an investor’s instructions to a broker or brokerage firm to purchase or sell a security on the investor’s behalf.

Order book

This refers to an electronic list of buy and sell orders for a specific security or financial instrument organized by price level.

Order-driven market

This is a financial market where all buyers and sellers display the prices at which they wish to buy or sell a particular security, as well as the amounts of the security desired to be bought or sold.

Over-the-counter (OTC)

This refers to the process of how securities are traded for companies that are not listed on a formal exchange such as Nigerian stock exchange.

Overtrading

This refers to excessive buying and selling of stocks by either a broker or an individual trader.

P

Par value

This is the face value of a bond.

Pre-market

This is the period of trading activity that occurs before the regular market session.

Preference shares

These are shares of a company’s stock with dividends that are paid out to shareholders before common stock dividends are issued.

Preferred stock

This is a type of equity ownership that have a higher claim to dividends or asset distribution than common stockholders.

Preferred dividend

This is a dividend that is accrued and paid on a company’s preferred shares.

Price-to-earnings ratio (P/E ratio)

This is the ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS)

Primary market

This issues new securities on an exchange for companies, governments, and other groups to obtain financing through debt-based or equity-based securities.

Public company

This is a corporation whose ownership is distributed amongst general public shareholders via the free trade of shares of stock on exchanges or over-the-counter markets.

Purchase price

This is the price an investor pays for an investment, and the price becomes the investor’s cost basis for calculating gain or loss when selling the investment.

Q

Quote-driven market

This is an electronic stock exchange system in which prices are determined from bid and ask quotations made by market makers, dealers, or specialists.

R

Rally

This is a period of sustained increases in the prices of stocks, bonds or indexes.

Realized gain

The results from selling an asset at a price higher than the original purchase price

Realized loss

This is the loss that is recognized when assets are sold for a price lower than the original purchase price

Return

This is the money made or lost on an investment over some period of time.

Reinvestment

This is the practice of using dividends, interest, or any other form of income distribution earned in an investment to purchase additional shares or units, rather than receiving the distributions in cash.

Reinvestment risk

This refers to the possibility that an investor will be unable to reinvest cash flows (e.g., coupon payments) at a rate comparable to their current rate of return.

Retained earnings

This is the amount of net income left over for the business after it has paid out dividends to its shareholders.

Risk

This is defined in financial terms as the chance that an outcome or investment’s actual gains will differ from an expected outcome or return.

Risk-averse

This describes the investor who chooses the preservation of capital over the potential for a higher-than-average return.

Risk-free asset

The one that has a certain future return—and virtually no possibility of loss.

S

Safe haven

This is an investment that is expected to retain or increase in value during times of market turbulence.

Sale

This is a transaction between two or more parties in which the buyer receives tangible or intangible goods, services, and/or assets in exchange for money.

Securities and Exchange Commission (SEC)

This is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of the securities markets, and facilitating capital formation.

Sell-side

This refers to the part of the financial industry that is involved in the creation, promotion, and sale of stocks, bonds, foreign exchange, and other financial instruments.

Share certificate

This is a written document signed on behalf of a corporation that serves as legal proof of ownership of the number of shares indicated.

Share repurchase

This is a transaction whereby a company buys back its own shares from the marketplace.

Shareholder

Also referred to as a stockholder, is a person, company, or institution that owns at least one share of a company’s stock, which is known as equity.

Shares

These are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.

Small cap

This is a term used to classify companies with relatively small market capitalization.

Stock

This is a security that represents the ownership of a fraction of a corporation.

Stock dividend

This is a payment to shareholders that is made in shares rather than in cash.

Stock market

This refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place.

Stock market crash

This is a rapid and often unanticipated drop in stock prices.

Stock split

This is a corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.

Stock symbol

This is a unique series of letters assigned to a security for trading purposes.

Stockbroker

This is a professional who executes buy and sell orders for stocks and other securities on behalf of clients.

Stop-limit order

This is a conditional trade over a set timeframe that combines the features of stop with those of a limit order and is used to mitigate risk.

Stop-loss order

This is an order placed with a broker to buy or sell a security when it reaches a certain price.

Stop order

This is an order to buy or sell a security when its price moves past a particular point, ensuring a higher probability of achieving a predetermined entry or exit price, limiting the investor’s loss or locking in a profit.

Systemic risk

This is the possibility that an event at the company level could trigger severe instability or collapse an entire industry or economy

T

Technical analysis

This is a trading discipline employed to evaluate investments and identify trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.

Tender offer

This is a type of public takeover bid constituting an offer to purchase some or all of shareholders’ shares in a corporation.

Tick

This is a measure of the minimum upward or downward movement in the price of a security

Time Horizon (Investment Time Horizon)

This is the period of time one expects to hold an investment until they need the money back.

Trader

This is an individual who engages in the buying and selling of financial assets in any financial market, either for himself or on behalf of another person or institution.

Trading session

This is a period of time that matches the primary daytime trading hours for a given market.

Transaction

This is an agreement between a buyer and a seller to exchange goods, services or financial instruments.

U

Underperforming

This an investment is underperforming, it is not keeping pace with other securities.

Undervalued

This is a financial term referring to a security or other type of investment that is selling for a price presumed to be below the investment’s true intrinsic value.

Unsystematic risk

This is unique to a specific company or industry.

V

Valuation

This is the analytical process of determining the current (or projected) worth of an asset or a company.

Value

This is the monetary, material, or assessed worth of an asset, good, or service

Value-Added Tax (VAT)

This is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale.

Value stock

This is a stock that trades at a lower price relative to its fundamentals, such as dividends, earnings, or sales, making it appealing to value investors.

Volume

This is the number of shares of a security traded during a given period of time

W

Withholding tax

This is an amount that an employer withholds from employees’ wages and pays directly to the government. The amount withheld is a credit against the income taxes the employee must pay during the year.

Y

Year to date (YTD)

This refers to the period of time beginning the first day of the current calendar year or fiscal year up to the current date.

Yield

This refers to the earnings generated and realized on an investment over a particular period of time.

Z

Zero-sum game

This is a situation in game theory in which one person’s gain is equivalent to another’s loss, so the net change in wealth or benefit is zero.