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Glossary
Glossary

Accrued Interest
The amount of interest which has accumulated in respect of an interest bearing security from the last payment up to settlement date.

Blue Chip Stock
Equity ownership in highly regarded investment-quality companies that tend to be well established, older, and have the ability to pay dividends in good and bad years.

Bond
A formal certificate of debt, usually issued by corporations or units of government.

Bear Market
A period during which the overall prices of shares are falling.

Bull Market
A period during which the overall prices of securities are rising.

Best Market
The current highest bid and the lowest offer in a specific security.

Bid
An order by a stockbroker to buy securities at a certain price. Can also refer to a price which a buyer is willing to accept for his securities.

Block-trade
A proposed match which is sufficiently large to exceed the capacity of the market. Effected during a special session in the market.

Bond
A formal certificate of debt, usually issued by corporations or government.

Capital Gain/Loss
The profit or loss made between the buying and selling prices of shares.

Capital Growth
The rise in the value of the initial investment.

Client contract notes
A record of the details of a transaction, its total value and all relevant charges incurred.

Commission
The fee charged by a stockbroker for carrying out a customer's instruction to buy or sell shares.

Contract Note
A document sent by a stockbroker to a client as evidence of having bought or sold securities in accordance with the client's instructions. It will state the quantity of securities traded, price, the commission, the total amount due and the settlement date.

Coupon Rate
The interest rate that an issuer promises to pay periodically over the life of a bond or other debt security, expressed as a percentage of "face value."

Defensive Stocks
Shares of companies relatively unaffected by general fluctuations in the economy. These companies tend to have slow, steady growth and become more popular during recessions. These companies usually provide products necessary for everyday life.

Dividend
A payment made to the owners of a company (the stockholders) of a portion of that company' s profits.

Debt to Equity Ratio
A company's debt divided by its equity. In other words a determination of how much a company has borrowed versus what the company is worth.

Earnings per share (EPS)
The amount of a company's profit allocated to each share after operating expenses, bond interest, taxes and preferred dividends have been paid. A company's board of directors decides what portion of the EPS is distributed as dividend.

Equity
Equity or share, is participation in the ownership of a corporation. Shareholders participate in a company's profits or losses through dividends and changes in the share's Market Value.

Exchange Floor
The room, area and other facilities from time to time designated or made available by the Exchange for effecting trades and other transactions between members during trading sessions of the Exchange.

Final Dividend
The dividend paid by a company at the end of its financial year.

Fixed Income Investment
A security, such as a bond, that pays a specific rate of interest.

Flotation
When a company's shares are sold to investors and quoted on the stock exchange for the very first time.

Initial Public Offering (IPO)
The first time that a company issues or sells its shares to the public.

Interim Dividend
A dividend declared part way through a company's financial year, authorised solely by its Board of Directors.

Listed Company
A company quoted on the stock exchange.

Listed Security
A security quoted on the stock exchange.

Market Imbalance
A situation in the Pre-Open market when the best bid is higher than the best offer.

Market Official
An Exchange Official who oversees the trading operations of the Exchange in accordance with the Bye-Laws.

Market Size
The number of shares in which a market maker is prepared to deal either as a buyer or as a seller, at the current, displayed prices.

MSE Account Number
An account number generated by the Malta Stock Exchange to serve as a point of reference for administrative purposes.

Net assets
This is the difference between total assets on the one hand and current liabilities and non-capitalised long-term liabilities on the other hand.

Nominal Value
The value ascribed to a share when it is first authorised and issued by a company. It bears no relationship to a share's market value. Also known as 'Par Value'.

Nominee Services
Nominee services are provided by a licensed entity to which securities are transferred to facilitate transactions and administration, while the customer remains as the actual owner of these securities.

Offer
An order by a stockbroker to sell securities at a certain price. Can also refer to a price which a seller will accept his securities.

Order
An instruction from a client to a stockbroker to buy or sell securities.

Par
This is the face value of a security at the time of issuance. Par value does not necessarily denote Market Value.

Premium
If the market price of a new share is higher than its issue price, the difference between these is called the premium. Discount is when the market price of a share is lower than the issue price.

Price-Earnings (PE) Ratio
Computed by dividing a share's current market price by its annual earnings per share, this ratio measures the number of times a share's price exceeds its earnings.

Primary Market
Where a company first offers to sell shares to investors, with the proceeds from the sale going to the organisation.

Put-through
Where a stockbroker has both buying and selling clients in the same security and amounting to the same size.

Record Date
The deadline, determined by a company's board of directors, by when an investor must be recorded as an owner of shares in order to qualify for a forthcoming dividend or share distribution.

Registrar
An organisation or an individual that takes responsibility for maintaining a company's share register.

Risk
There are several types of risk: Interest Rate Risk, Principal Risk, Purchasing Power Risk, and others. Each Risk level is a measure of the volatility and likelihood of loss in an investment.

Secondary Market
A collective term for the markets, namely, exchange and over-the-counter, in which stocks are bought and sold after they are issued to the public. Proceeds from trades in this market go to investors.

Settlement
Once a deal has been made, the settlement process transfers stock from seller to buyer and arranges the corresponding movement of money between buyer and seller.

Special Trade
A trade whose nature is classified by the Council of the Malta Stock Exchange as 'special'. Such deals will normally have a strategic impact on the listed company.

Stockbroking Firm
A firm consisting of one or more stockbrokers who buy and/or sell securities on behalf of an investor on a stock exchange and receive remuneration for this service in the form of a commission.

Thin market
Arises when there are few buyers or sellers for a security. Typically gives rise to increased price volatility. This is also known as an illiquid market.

Trade Range
The percentage increase/decrease from the trade weighted average price dealt in during the last trading session in which that particular security was trading.

Trading Session
The period during which orders can be entered, amended, cancelled and trades take place. A typical trading session contains a Pre-Open session, a 'Put-through' and a 'Block-trade' session, 'At the Open' and an 'Opened' stage.

Underwriter
An institutional investor who effectively insures a new issue (or rights issue) by agreeing to buy all shares which are not sold to other investors.

Volume
The total number of shares traded (bought and sold) in a given period of time.

Yield To Maturity
The return available taking into account the interest rate, length of time to maturity and the price paid. It is assumed that the security is held to maturity and that all interest received over the life of the security can be reinvested at the original purchase yield to maturity.


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