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<Back to homepage <Back to main glossary >To Shares page Glossary of share market terms ALL ORDINARIES Share Price Index (All Ords) The index is made up of the weighted share prices of approximately 500 of the largest Australian companies. Established by ASX at 500 points in January 1980, it is the predominant measure of the overall performance of the Australian sharemarket. The companies are weighted according to their size in terms of market capitalisation (total market value of a company's shares).
ANNUAL GENERAL MEETING: A meeting of shareholders that must be held every calendar year to enable them to view the records of the company. Elect directors vote on matters integral to the running of the company.
ASSETS: Everything that a person or company owns or has due to it. Cash, investments, money due. Stocks and materials and Current Assets. Buildings and machinery are Fixed Assets. Patents and goodwill are Intangible Assets. Assets surplus to liabilities are Net Assets.
ASSET BACKING: Useful check for investors: net assets of a company (in $) are Divided by the number of issued shares. So ABC Ltd. with $100 000 net assets and 10 00 shares issued has an Asset Banking of $10.00 per share: relate this to firm's earning capacity.
ARBITRAGE: Buying and selling the same or equivalent securities at the same time in different markets to take advantage of a price difference.
ARTICLES OF ASSOCIATION: Documents required by the Companies Act detailing the rules for the internal management of the company.
ASSOCIATE COMPANY: A company that is owned between 20% and 50% by another company.
AT DISCRETION: Type of instruction given by a client to buy or sell a stock at the broker's discretion as to price. Similarly, At Limit where the order places a limit on either the highest price that may be paid or the lowest price at which a sale may be made; also At the Market where the order is to buy or sell at about the market price at the time that the order is given.
BEAR: A person who expects prices to fall and sells securities hoping that he will make a profit by subsequently repurchasing at a lower price.
BETA FACTOR: A measure of an individual stock's volatility. i.e. the propensity to fluctuate.
BID: The buying price of purchasers.
BLUE CHIP STOCKS: Shares usually high priced of a company known for its ability to make profits in good times or bad. Yield is often proportionately low. They usually set the market level.
BOARD OF DIRECTORS: An elected body of persons formed to control the planning and implementation of corporate objectives.
BOND: Document recording a loan, promising to pay the Bondholder specified interest for a specified time and to repay the amount lent on expiry date.
BONUS ISSUES: Distribution of funds to shareholders in the form of shares issued free, usually a capital item.
BOOM MARKET: A market in which buying demand greatly exceeds selling pressure. In these circumstances price rise.
BULL: A person who buy securities in the expectation that price will rise and so give him an opportunity to resell at a profit.
BROKERAGE: The charge applied by a stockbroker for conducting your business through him.
CALL: Often No Liability (N.L.) and sometimes Limited Liability companies have share that are not fully paid. A call may be made for the payment of part or all of this outstanding capital. Holders of shares in N.L. companies may avoid payment (the call) and forfeit their shares hence the name No Liability . Holders of shares in Limited Liability companies cannot avoid a call and are Liable for monies so called.
CAPITAL: Has several meanings. In a more general context it refers to the funds that have to be invested in an enterprise to establish and maintain it more specifically it refers to equity or risk funding rather than debt funding.
CAPITAL GAIN: Excess of realisable value over the historical cost of a capital item or investment.
CAPITALISATION: In stock market terms the value of a company, that is, share price multiplied by the number of shares on issue.
CHESS : ASX's Clearing House Electronic Sub-Register System which provides the central register for electronic transfer of share ownership.
CHESS APPROVED : The SCH Business Rules state that CHESS approved, in relation to Securities, means Securities approved by SCH in accordance with Section 3 of the SCH Business Rules. SCH is ASX Settlement and Transfer Corporation Pty Ltd (ASTC) (ACN 008 504 532), which is approved as the Securities Clearing House under the Corporations Law.
CHESS SUBREGISTER : That part of an entity's register for a class of CHESS approved securities that is administered by SCH and records uncertificated holdings of securities in that class.Note: The register may be of shares, options or other securities that are CHESS approved, including CDIs which are units of beneficial ownership issued over principal securities.
CONTRACT NOTES: Document sent to a buyer or seller confirming the transaction and showing detail as to price, brokerage and any other charges involved.
CONTRIBUTING SHARES: Shares that are not fully paid. Usually refers to No Liability companies (see call)
CONVERTIBLE NOTE: Issued as a fixed interest security with the right to be either redeemed for cash or converted into ordinary shares at a predetermined date or period. Rights of notes vary with some participating fully in cash and bonus issues and others only partially participating.
COUPON: Interest voucher usually attached to bonds and exchangeable for cash on its due date (half-yearly or yearly).
COVER: Security or cash lodged with a broker under certain circumstances, when the client buys securities without making payment in full.
CUM: Abbreviation of cumulative. also "cum" meaning with as in cum divided, cum bonus issue.
CUMULATIVE: Refers to the right of some preference shares to receive a dividend for each financial period even through no dividend has been declared. When such a dividend has been omitted it becomes an arrear.
DEBENTURE: A security with a fixed interest rate. "Secured" by a charge over assets.
DEBT FUNDING: Through issuing debentures or increasing other liabilities to finance to finance operations. Alternative to equity funding.
DELISTED: Removed shares or securities that were once quote on a stock exchange.
DEPRECIATION: Amounts changed to provide for that part of the cost, or book value of a fixed asset which is not recoverable when it is finally put out of use.
DEREGULATION: On 1st April, 1984, the stockbroking industry was thrown open to corporations and financial institutions. Up to 50% of member organisations can be owned by these corporations.
DERIVATIVE : A derivative is an instrument that derives its value from that of an underlying instrument (such as shares, share price indices, fixed interest securities, commodities, currencies etc). Warrants and exchange traded options are types of derivatives.
DIRECTORS: Persons elected by shareholders, who are responsible for the implementation of corporate objectives.
DISCOUNT: The amount by which a security is quoted below its face value. The opposite to "premium".
DIVIDEND: Distribution of profits among shareholders usually expressed as a percentage of paid-up capital or as an amount per share.
DIVIDENDS IMPUTATION : The tax credits passed on to a shareholder who receives a franked dividend. Under provisions of the Income Tax Assessment Act, imputation credits entitle investors to a rebate for tax already paid by an Australian company.
DIVIDEND YIELD: The amount of dividend paid in cents per share divided by the market price in cents per share, expressed as a percentage.
ENTITLEMENT ISSUE: See Right.
EXDIVIDEND: Securities are quoted "ExDividend" five days before a company's Books close to determine shareholders' entitled to the dividend. Shares sold "ExDividend" entitle the seller to retain the dividend then current.
EQUITY: Ownership, usually through ordinary shares, Debentures of a company.
EQUITY FUNDING: Through issuing new shares at par or a premium. Alternative to debt funding.
FACE VALUE: See Par.
FLOAT: The initial raising of capital by public subscription.
FRANKED DIVIDEND : A dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit, or reduction in the amount of income tax that must be paid, up to the amount of tax already paid by the company.
GILTEDGED: Securities noted for their stability, usually Government or SemiGovernment stocks.
GROWTH STOCK: Stock with good prospects for future expansion, so promising capital gain. Immediate income prospects may be modest.
IMPUTED CREDITS : The tax credits passed on to a shareholder who receives a franked dividend. Under provisions of the Income Tax Assessment Act, imputation credits entitle investors to a rebate for tax already paid by an Australian company. See dividend imputation.
INSIDE INFORMATION: Confidential information available to a small number of people.
ISSUER SPONSORED SUBREGISTER : That part of an entity's register for a class of CHESS approved securities that is administered by the entity (and not SCH) and records uncertificated holdings of securities. Note: The register may be of shares, options or other securities that are CHESS approved.
INSTITUTION: In the investment context, refers to these bodies with large investable funds, for example pension funds, insurance and assurance companies.
INTERIM DIVIDEND: A dividend paid during the year and not at the end. Most profitable companies pay dividend every half year.
JOINT VENTURE: An agreement for two or more parties to jointly explore, finance or direct a particular development. May be in various forms that is 50/50, 75/25, within the right to increase to 60/40 etc.
LISTED STOCK: Securities which are approved for admission to trading on stock exchange.
LIMITED LIABILITY: The liability of shareholders is limited to the fully paid value of shares held. If partly paid shares are held in a limited company and a call is made, the holder is liable to pay call.
LIQUIDATOR: A person appointed to take charge of the winding up of a company.
LONG POSITION: Actually owning securities the reverse of being Short.
MARKETABLE PARCEL: The minimum number of shares that can be quoted for sale. The number becomes less as the price rises.
MARKET PRICE: The prevailing price to buy or sell a security on the open market.
MEMORANDUM OF ASSOCIATION: The initial legal document in the incorporation of a company, stating full details of the company, its powers and objectives.
MONEY MARKET: A general descriptive term relating to Banks and financial institutions that deal in treasury notes, money and short dated securities.
NO LIABILITY: The Companies Act permits the registration of Mining companies in the form of "No Liability", i.e. the shareholders cannot be sued for payment of any Call made. Failing payment of a Call the shares are forfeited.
NONRENOUNCEABLE RIGHT: See Right. These rights are not able to be sold on the open market.
NOMINAL CAPITAL: The amount of the share capital with which the company is registered and stated in the Memorandum of Association. (also called Registered or Authorized Capital).
ODD LOT: A quantity of shares, the number of which is less than a marketable parcel. Usually dealt with by an odd lot broker.
OFFICIAL LIST: Name of securities permitted quotation on the Stock Exchange.
OFFER: The price at which one offers to sell also known as the "asking price".
OPERATOR: Employee of a broking firm who operates on the trading floor and effects orders placed with his firm.
ORDER: Instructions by a client to buy or sell securities.
PAR: The nominal or stated value given to shares by the articles of a company. It often has no relation to the asset value or worth of shares.
PENNY STOCKS: High speculation low price issues. Mostly mining and oil exploration shares.
PLACEMENT: An allotment of shares, debentures, etc. made directly from the company to investors, rather than through the medium of a cash issue.
PORTFOLIO: Investor's holding of securities of various types. The wise investment policy is to build up a balance portfolio according to personal requirements.
PREFERENCE SHARES: These have preferential rights over ordinary shares as to claims on assets, earnings and dividends but lower rights to creditors and debenture holders.
PREMIUM: Usually refers to the difference between issue price and par value of cash issues.
PRIORITY ISSUE: Where shareholders may apply for an issue in related company on a priority basis.
PROFIT TAKING: Cashing in paper profits by selling.
PROXY: Written authorisation given by a shareholder to another person to vote on his behalf at a company meeting.
PROSPECTUS: Document issued by a company setting out the terms of its public issue or debt raising. Subject to the regulations of the Stock Exchange and the Companies Act.
RALLY: Short, spirited price rise.
REACTION: A temporary price weakness that follows a sharp up swing.
RECONSTRUCTION: A company may adjust its capital issues by reconstructing its shares into units of greater face value. Opposite to share split.
RENOUNCEABLE RIGHT: See Right. These rights may be sold on the open market.
RIGHT: A privilege granted to shareholders to buy new shares in the same company, usually below the prevailing market price. A right can be exercised or sold. They are usually issued on a predetermined ratio, for example, one right for every four shares held.
SEATS : This is the Stock Exchange's Automated Trading System provided for the trading of securities on ASX.
SCH : At 1 July 1996, in the SCH Business Rules, SCH means ASX Settlement and Transfer Corporation Pty LTD (ACN 008 504 532) as approved as the securities clearing house under the Corporations Law.
SCRIP: Certificates of loan securities, shares in a company etc. Always keep your scrip in a safe place.
SECURITY: Refers to the form of investment used, that is , share, debentures and bonds.
SHARE PRICE INDEX: Index which measures the level of share price at any given time. There is now a Contract on the Futures Exchange for the Share Price Index (S.P.I.).
SHORT POSITION: This occurs when a trader sells securities he may not actually own.
SPECULATOR: One who purchases shares in anticipation of selling the shortly there after at a profit.
SPLIT: A company may adjust its capital issue by splitting its shares into units of less face value. Such Splits of say $2 shares into $0.50 shares, help small investors and tend to make company's shareholders more widespread.
SRN : SRN stands for Security-holder Reference Number, which is allocated by an Issuer to identify a Holder on an Issuer Sponsored or Certificated Subregister.
STAG: A person who applies for a New Issue of securities with the intention of reselling immediately at a profit, as opposed to one whom invests for long term holding.
STOCKBROKER: A Stock Exchange Member who buys and sells stocks, shares and securities for clients.
STOCK UNIT: Traditionally a numbered equity in a company. Term used interchangeably with share.
SYDNEY FUTURE EXCHANGE: Location where all futures contracts in Australia are traded.
SUBSCRIPTION: The application by the public for shares etc. being offered for issue in a prospectus.
SUBSIDIARY: A company that is owned or controlled by another company. Ownership or control need not be completed but must be through a majority.
TAKEOVER: When companies or individuals wish to obtain control or to buy out an existing company the bidder will circularise the shareholders bidding a certain price share. This may be above the current market price but below the asset value of the company's shares. There is usually a proviso that the offer may be conditional upon acceptance in respect of a minimum number of shares and within a certain date specified. TAXATION: See Share information page.
THIN MARKET: The situation applicable to any issue when few shares are offered for sale, few buyers are available or a combination of both.
TRADING FLOOR: Physical area where stock exchange transactions take place.
TRUSTS: Investments which involve pooling investors' money and have experts that invest money for the individuals. Trusts almost always concentrate on one area of investment. The three most common are Equity, Property and Cash Management.
UNDERWRITER: One who arranges an issue of new securities by guaranteeing full subscription.
UNSECURED NOTES: A fixed interest security similar to a debenture but not "secured" by a change over assets. Holders may appoint a trustee.
VENDOR SHARES: The shares received by the seller of a property from the company to which he sells the property. Sometimes the seller of the property receives both Vendor Shares and cash.
WARRANTS : A warrant is a financial instrument issued by a bank or other financial institutions, which is traded on the Australian Stock Exchange's equity market. Warrants may be issued over securities such as shares in a company, a currency, an index or a commodity.
WINDING UP: The cessation of business through a court order, or by a special resolution by creditors or shareholders. Assets must be realised to provide for the liabilities and expenses of the business.
WORKING CAPITAL: The excess of current assets over current liabilities.
YIELD: Refers to Dividend Yield. Top of page <Back to homepage <Back to main glossary >To Shares page
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