Capital Market Lexicon

Ask Price: The price at which someone who owns a security offers to sell it; also known as the asked price.

Bear: A term indicating the behaviour of someone who anticipates that prices will fall.

Bear Market: A term used to explain a general downturn (falling prices) in the stock market.

Below Par : at a discount or less than face (nominal value) value

Best Ask: The price at which someone who owns a security offers to sell it; also known as the asked price.

Best Bid: The price a prospective buyer is prepared to pay at a particular time for trading a unit of a given security.

Beta: A measure of the volatility of a stock relative to the overall market. A beta of less than one indicates lower risk than the market; a beta of more than one indicates higher risk than the market. The Nigerian Stock Exchange “All-Share Index” is used as the underlying index to measure the overall market for beta.

Bid: The price a prospective buyer is prepared to pay at a particular time for trading a unit of a given security.

Blue Chip Stocks: are stocks of well-established companies that have stable earnings and no extensive liabilities. They have a track record of paying regular dividends, and are valued by investors seeking relative safety and stability. The name comes from the blue-colour chips in the game of poker, which are typically the most valuable chips.

Bull: A term indicting the behaviour of someone who expects that prices will rise.

Bull Market: A term used to explain a general positive trend(rising price) in the stock market.

Contract note: An acknowledgement forwarded to a client by a Stockbroking House verifying the transactions made on the client’s behalf.

Debt to Equity Ratio: Long-term debt divided by shareholders' equity, showing relationship between long-term funds provided by creditors and funds provided by shareholders; high ratio may indicate high risk, low ratio may indicate low risk.

Diluted EPS: Diluted EPS (earnings per share) is a company's EPS figure as calculated using fully diluted shares outstanding. It takes into account non-exercised stock options and convertible bonds; hence the number is fully diluted.

Diversification: The acquisition of a group of assets in which returns on the assets are not directly related over time. Proper investment diversification is intended to reduce the risk inherent in particular securities. An investor seeking diversification for a securities portfolio would purchase securities of firms that are not similarly affected by the same variables. For example, an investor would not want to combine large investment positions in airlines, trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates.

Dividend: Distribution of earnings to shareholders prorated by the class of security and paid in the form of money, stock, scrip, or, rarely, company products or property. The amount is decided by the Board of Directors and is usually paid quarterly or annually. Mutual fund dividends are paid out of income, usually on a quarterly basis from the fund's investments.

EBITDA: Earnings before interest, taxes, depreciation, and amortization.

Income Stocks: Stocks that offer a higher dividend in relation to their market price. They are especially attractive to investors who are looking for current income that will gradually grow over the years as a way to offset inflation.

Market Capitalisation (Value): For listed securities on the Nigerian Stock Exchange, the price per share of the specified security multiplied by the number of shares issued and outstanding for the specified security..

Offer Price: The price at which the shares were originally offered to the public.

Open Order: An order to buy or sell a security that remains in effect until it is either cancelled by the customer or executed.

Penny Stocks: are low-priced securities, considered as speculative and risky but with potential for above average returns.

P/B Ratio (price/book ratio): A stock analysis statistic in which the price of a stock is divided by the reported book value (as of the date specified) of the company.

P/C Ratio (price/cash flow ratio): A financial ratio that compares stock price with cash flow from operations per outstanding shares.

P/E Ratio (price/earnings ratio): A stock analysis statistic in which the current price of a stock (today's last sale price) is divided by the reported actual (or sometimes projected, which would be forecast) earnings per share of the company; it is also called the "multiple".

Return on Capital (ROC): A distribution of cash resulting from depreciation tax savings, the sale of a capital asset or of securities in a portfolio, or any other transaction unrelated to retained earnings.

Return on Equity (ROE): A measure of the net income that a firm is able to earn as a percent of stockholders' investment (net income divided by shareholders' equity).

Value Stocks: are securities which investors consider to be undervalued. They feel that the stock is being traded below market value, and they believe in the long-term growth of the issuing company.

Volatility: The degree of price fluctuation for a given asset, rate, or index; usually expressed as a variance or standard deviation.

Yield: In general, a return on an investor's capital investment. For bonds, the coupon rate of interest divided by the purchase price, called current yield. Also, the rate of return on a bond, taking into account the total of annual interest payments, the purchase price, the redemption value, and the amount of time remaining until maturity. For equities, it is more commonly referred to as “dividend yield” as is the cash dividend per share divided by the market price per share.