Mutual Fund

Hedge Fund

An aggressively managed portfolio of investments that uses advanced investment strategies such as leverage, long, short and derivative positions in both domestic and international markets with the goal of generating high returns.

Holding Period

In a long position, holding period refers to the time between an asset’s purchase and its sale. In a short sale, the length of time for which the short position is held.

Initial Public Offering ‘ IPO

The first sale of stock by a private company to the public.

Income Fund

A mutual fund that seeks to provide stable current income by investing in securities that pay interest or dividends.

Index

A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it.

Index Fund

A portfolio of investments that is weighted the same as a stock-exchange index in order to mirror its performance.

Insider Trading

The buying or selling of a security by someone who has access to material, non-public information about the security. Insider trading can be illegal or legal depending on when the insider makes the trade. It is illegal when the material information is still non-public.

Institutional Investor

A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions.

Liquidity

The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price.

Maturity Date

The date on which the principal amount of a note, draft acceptance bond or other debt instrument becomes due and is repaid to the investor and interest payments stop.

Mid Cap

Companies having a market capitalization between Rs 500 crore and Rs 1,000 crore.

Mutual Fund

A security that gives small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed.

NAV’Net Asset Value

The total value of the fund’s portfolio less liabilities.

Open End Fund

A type of mutual fund where there are no restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.

Oversubscribed

A situation in which the demand for an initial public offering of securities exceeds the number of shares issued.

P/E Ratio’Price-Earnings Ratio

PE ratio or PE multiples is the ratio arrived by dividing Current market Price by Earnings per share of that stock.

Pension Fund

A fund established by an employer to facilitate and organize the investment of employees’ retirement funds contributed by the employer and employees.

Portfolio

The group of assets’such as stocks, bonds and mutual’held by an investor.

Redemption

The return of an investor’s principal in a security, such as a stock, bond, or mutual fund.

Registrar

An institution or organization that is responsible for keeping records of bondholders and shareholders.

Sensex

An abbreviation of the Bombay Exchange Sensitive Index (Sensex)’the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE.

Warrant

A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific rise within a certain time frame.

Write-O

A reduction in the value of an asset or earnings by the amount of an expense or loss.

YOY’Year Over Year

A method of evaluating two or more measured events that compares the results of measurement at one time period with those from another time period, on an annualized basis.

Yield

Yield is the annual rate of return for any investment and is expressed as a percentage.

Futures Contract

Futures Contract means a legally binding agreement to buy or sell the underlying security on a future date. Future contracts are the organized/ standardized contracts in terms of quantity, quality (in case of commodities), delivery time and place for settlement on any date in future. The contracts expires on a pre-specified date which is called the expiry date of the contract. On expiry, futures can be settled by delivery of the underlying asset or cash. Cash settlement enables the settlement of obligations arising out of the future/option contract in cash.

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