Stock Market

De-materialization

De-materialization is the process by which physical certificates of an investor are converted to an equivalent number of securities in electronic form and credited into the BO�s account with his DP.

Dalal Street

A term that refers to the Bombay Stock Exchange, the major stock exchange in India. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions.

De-merger

A corporate strategy to sell of subsidiaries or divisions of a company.

Debenture

A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital.

Debt

An amount of money borrowed and owed by one party to another.

Debt Fund

An investment pool, such as a mutual fund or ETF, in which core holdings are fixed income investments. The fee ratios on debt funds are lower, on average, than equity funds because the overall management costs are lower.

Derivative

The term �Derivative� indicates that it has no independent value, i.e. its value is entirely �derived� from the value of the underlying asset. The underlying as set can be securities, commodities, bullion, currency, live stock or anything else. In other words, Derivative means a forward, future, option or any other hybrid contract of pre-determined fixed duration, linked for the purpose of contract full filment to the value of a specified real or financial asset or to an index of securities.

Disinvestment

The action of an organization or government selling or liquidating an asset or subsidiary.

Diversification

A risk-management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Dividend

Distribution of a portion of a company�s earnings, decided by the board of directors, to a class of its shareholders.

EBITDA�Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA is a good metric to evaluate profitability.

EPS�Earnings per Share: EPS is the earning on each share of a company.

ESOP�Employee Stock Ownership Plan: A qualified, deed contribution, employee benefit plan designed to invest primarily in the stock of the sponsoring employer.

FCCB�Foreign Currency Convertible Bond: A type of convertible bond issued in a currency different from the issuer�s domestic currency.

FDI�Foreign Direct Investment: An investment abroad, usually where the company being invested in is controlled by the foreign corporation.

FII�Foreign Institutional Investor: Foreign Institutional investors (FIIs) are entities established or incorporated outside India and make proposals for investments in India. The biggest source through which FIIs invest is the issuance of Participatory Notes (P-Notes), which are also known as Offshore Derivatives. Types of typical investors include banks, insurance companies, retirement or pension funds, hedge funds, investment advisors and mutual funds.

GAAP�Generally Accepted Accounting Principles: The common set of accounting principles, standards and procedures that companies use to compile their financial statements.

GDR�Global Depositary Receipt: A bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank.

Gilt Fund

A mutual fund that invests in several different types of medium and long-term government securities in addition to top quality corporate debt.

Growth Fund

A diversified portfolio of stocks that has capital appreciation as its primary goal, and thereby invests in companies that reinvest their earnings into expansion, acquisitions, and/or research and development.

Haircut

The difference between prices at which a market maker can buy and sell a security.

Hedge

Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

Written by princy

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