stocks

Question 1

Ask / Offer Price

Answer 1

The price at which the Seller wants to sell shares is called Ask / Offer Price.

Question 2

Assets

Answer 2

Everything that the company owns on its name, including the cash, equipments, land, technology, etc is known as assets.

Question 3

At the money

Answer 3

The nearest option strike level with a minimum difference between the Strike level and the future price is ATM (At the Money) option strike.

Question 4

Bear Market

Answer 4

A falling market prices are termed as Bear Market

Question 5

It is the measure of relationship between the stock price of any particular stock and the movement of Index representing the market. High Beta stocks means the stocks that are rising much higher than the Index and Low beta stocks are the stocks that are not performing as the Index is.

Answer 5

Beta

Question 6

The price at which the Buyer wants to buy shares is called Bid / Buy Price.

Answer 6

Bid

Question 7

Blue Chip Stocks are Stocks of large, well-established, stable and financially-sound companies. These stocks typically have a market capitalization in thousands of crores.

Answer 7

Blue Chip Stock

Question 8

The bond is a debt security, under which the issuer owes the holders a debt and depending on the terms of the bond, the issuer is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Interest is usually payable at fixed intervals (semiannual, annual & sometimes monthly).

Answer 8

Bonds

Question 9

A registered company or firm is said to be a broker, when it acts on behalf of the client in buying or selling of shares. Broker can act as an advisor for purchase and sell of listed stocks, they do not own the securities at any point of the time. However they charge a commission for their service.

Answer 9

Broker

Question 10

Bull Market

Answer 10

A rising market prices are termed as Bull Market.

Question 11

Call Option

Answer 11

Call option gives investor the right but not obligation to buy a particular stock at a specified price within a specified time period.

Question 12

Close Price

Answer 12

The final settlement price of a stock on a given particular trading day.

Question 13

Commodity Market

Answer 13

Commodity Market: Definition, Types, Example, and How It Works
A commodity market is a marketplace for buying, selling, and trading raw materials or primary products. Commodities are often split into two broad categories: hard and soft commodities.

Question 14

Popular commodity Market

Answer 14

Multi Commodity Exchange of India Ltd. (MCX).
Indian Commodity Exchange (ICEX).
National Multi Commodity Exchange of India (NMCE)
National Commodity and Derivative Exchange (NCDEX)

Question 15

Defensive Stock

Answer 15

A stock that usually provide constant dividends and stable earnings regardless of the performance of stock markets, even in the extreme critical situations of the stock market these companies continue to pay the dividends at a constant rate.

Question 16

Delta

Answer 16

Delta is a ratio which compares the change in the price of the underlying asset to the corresponding change in the price of a derivative. It has a range from 0 to 1. It is also known as Hedge Ratio.

Question 17

Derivative

Answer 17

A derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, stocks or interest rate, and is simply called the “underlying”.

Question 18

Diversification

Answer 18

It is a strategy where assets from different classes are included to construct a portfolio. It leads to yield higher long term returns and reduces the risk of holding an individual asset.

Question 19

Dividend

Answer 19

A portion of the company’s earnings decided to pay to its shareholders in return to their investments. It is usually declared as a percentage of current share price, usually decided by the board of directors of the company.

Question 20

Equity Shares

Answer 20

Equity shares are defined as long term financing options for firms looking to raise capital. They are also referred to as common stock, or common shares, and are offered as an investment opportunity to the public.

Question 21

Face value

Answer 21

Face value of a share, also known as the par value, is the value at which a share is listed on the stock market. Mostly the face value of a share is less than the market value. The market value of a company changes based on its performance and demand and supply of its stock.

Question 22

A strategy or an attempt in reducing the risk of adverse price movements of assets.

Answer 22

Hedge

Question 23

The strikes below ATM Strike level are ITM Strikes for Call and the strikes above ATM strike level are ITM strikes for Put.

Answer 23

In the Money

Question 24

Companies which has a solid record of dividend payments and offers the dividend higher than the common stocks.

Answer 24

Income Stocks

Question 25

Initial Public Offering (IPO)

Answer 25

IPOs (Initial Public Offerings) are stocks which are newly issued. Since they are new, which means they have not been traded on the stock exchange previously. IPOs are generally issued by smaller, younger companies seeking funds for expansion and growth, but large companies also practice this to become publicly traded companies.

Question 26

Limit Order

Answer 26

A limit order allows investors to purchase or sell a stock at a specified price or better. In case of buy limit orders, the order will only get executed below or at the limit price, while for selling limit orders, the order will only get executed above or at the limit price.

Question 27

Listed stocks are the stocks that can be purchased or sold in live market.

Answer 27

Listed Stocks

Question 28

Market cap, or market capitalization, refers to the cumulative value of all stock shares of a company. It is determined by multiplying by the total number of outstanding shares with the price of a stock.

Answer 28

Market Capitalization

Question 29

Market Order

Answer 29

In a stock market, a market order is a purchase or sell order in which investors merely specify the quantity they wish to buy or sell, and the price is determined based on current market prices.

Question 30

Mutual Fund

Answer 30

Mutual funds are considered to be one of the most popular investment options in the current times. It is an investment vehicle that is formed by an AMC (Asset Management Company) that pools in funds from different investors who have common investment goals. They are a smart option for investors who are looking to increase the diversity of their portfolio while also increasing their exposure. The investment made by a variety of investors is managed by the fund manager who is a financial professional. This fund manager would purchase different securities such as bonds and stocks that are aligned with the interest of investors

Question 31

A market that has only potential buyers or potential sellers which drives the market to go upwards or downwards respectively.

Answer 31

One-sided Market

Question 32

An electronic record where all the pending buy and sell orders of particular stocks are maintained.

Answer 32

Order Book

Question 33

The strikes above ATM Strike level are OTM strikes for Call and the strikes below ATM strike level are OTM Strikes for Put

Answer 33

Out of Money

Question 34

Portfolio

Answer 34

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs). You may choose to hold and manage your portfolio yourself, or you may allow a money manager, financial advisor, or another finance professional to manage your portfolio.

Question 35

Maximum number of futures and options contract that any individual investor can hold at any given point of time.

Answer 35

Positions Limit

Question 36

Post-closing session

Answer 36

Similar to pre-open session, the post closing session starts at 3:40 pm to 4:00 pm. One can place orders during this time only in equity market. Buy / Sell orders are placed at market price during this session.

Question 37

Pre-opening session

Answer 37

The pre-open session is for duration of 15 minutes i.e. from 9:00 AM to 9:15 AM. In pre-open session for the first 8 minutes (between 9:00 AM and 9:08 AM) order entry, modification and cancelation takes place. One can place limit orders / market orders, The order collection window closes any time between 9:07 AM and 9:08 AM. Placing orders during the order collection time is allowed only in equity market. The orders which are placed are matched and trades are confirmed

Question 38

Price Earnings (P/E) Ratio

Answer 38

The PE (price to earnings) ratio is a commonly used ratio for stock selection. The ratio helps to ascertain the value of a company based on the current stock value per share for every rupee of its future earnings. P/E ratio helps to understand the company’s worth today and growth anticipated based on how its share prices are relative to its earnings per share. To calculate the P/E ratio, one should divide the present stock value by the earnings per share (EPS)

Question 39

Put Option

Answer 39

Put option gives investor the right but not obligation to sell a particular stock at a specified price within a specified time period. Put option is purchased by those who believe that particular stock price is going to fall down than the stated price.

Question 40

Risk Appetite’ refers to the maximum amount of risk that you, as an investor, are ready to take for the furtherance of your objectives before the risk outweighs the benefits

Answer 40

Risk Appetite

Question 41

Stock Index is an index that measures a stock market, it helps investors compare current price levels with past prices to calculate market performance. It is computed from the prices of selected stocks.

Answer 41

Stock Index

Question 42

An attempt to increase the number of outstanding shares of a company by splitting the existing shares. It is usually done to increase the availability of shares in the market. The usual split ratio is 2:1 or 3:1, i.e. one share is split into two or three.

Answer 42

Stock Split

Question 43

The price at which the holder of an option can buy (in case of call option) or sell (in case of put option) the securities they hold when the option is executed.

Answer 43

Strike Price

Question 44

Monday to Friday, excluding public holidays.

Answer 44

Trading days

Question 45

Buyers and sellers can come for trading between 9:15 am to 3:30 pm, within this time frame all the orders of the day must be placed.

Answer 45

Trading session

Question 46

Yield / Return

Answer 46

The yield is the income the investment returns over time, typically expressed as a percentage, while the return is the amount that was gained or lost on an investment over time.