Bear : An investor who anticipates a falling market and, therefore, sells the security in the hope of buying it back at a lower price.

Blue Chip : A largely well-established company with a history of profitable operations.

Bonds : Fixed-income securities which entitle the holder to a pre-determined return during their life and repayment of principal at maturity.

Bull : An investor who anticipates a rising market and, therefore, buys the security in the hope of selling it later at a higher price.

Capital gains tax : Tax payable on profit arising form appreciation in value of Investment, realized at the time of selling or maturity of investment.

Carry-Over Trades : Equity repurchase transactions, better known in Pakistan as “Badla”, are an established form of transactions used in the stock market for temporary financing of trades by speculators and jobbers.

Dividends : That par0 of a company’s profit which is distributed among shareholders, usually expressed in rupee per share or percentage to paid-up capital. It could be in form of cash or stock (bonus shares).

Earning per share (EPS) : A profitability indicator calculated by dividing the net after-tax earnings (earnings available to common shareholders) during a period by the average number of shares outstanding at the end of that period.

Equity : The owners’ interest in a company’s capital, usually referred to as ordinary shares.

Floatation : The occasion when a company’s shares are offered on the stock market for the first time.

Funds Managers : A company which invests and manages investors’ stock market for the first time.

Initial Public Offering (IPO) : The offering of equity shares of a company to the general public for the first time.

Inside trading : The purchase or sale of shares by someone who possessed ‘inside’ information on a company’s performance i.e. information that is not available tot eh market and which might affect the share price. In Pakistan, such details are a criminal offence.

Investment companies : A company which issues shares and uses its capital to buy securities and shares in other companies.

Listed Companies : A company whose securities are admitted for listing on a stock exchange.

Long Position : When an individual purchases securities of a company, he is said to have a long position in the company’s shares. For example, an owner of shares in PTCL is said to be “long PTCL” or “has long position in PTCL”. If you are long, you would like the share price to go up.

Market capitalization : The total value of a company’s equity capital at the current market price.

Nominee : A person or company which holds securities on behalf of others, but is not the owner of such securities.

Option : The right (but not the obligation) to buy or sell securities at a fixed price within a specified period.

Ordinary shares : The most common form of shares which entitle the owner to jointly own the company. Holders may receive dividends depending on profitability of the company and recommendation of directors.

Portfolio : A collection of investments.

Price/earning Ratio (P/E ratio) : The P/E ratio is a measure of the level of confidence (rightly or wrongly) investors have in a company. It is calculated by dividing the current share price by the last published earning per share.

Primary market : Where a company issues new shares, either for the first time. Or at the time of issuing additional securities.

Privatization : Conversion of a state-owned company to a public limited company (plc) status.

Private Limited Company : A company that is not a public company and which is not allowed to offer its shares to the general public.

Public Limited Company (plc) : A company whose shares are offered to the general public and traded freely on the open market and whose share capital is not less than a statutory minimum.

Right Issue : The issue of additional shares to existing shareholders when companies want to raise more capital.

Securities : A broad term for shares, corporate bonds or any other instrument of investment in the capital market.

Settlement : Once a deal has been made, the settlement process transfers stock from seller to buyer and arranges the corresponding exchange of money between buyer and seller.

Short selling : The act of borrowing stock to sell, expecting the price to go down and with the intention of buying it back at a cheaper price.

Stock Broker : A member of the stock exchange who deals in shares for clients and advises on investment decisions.

Stock Market : The market place where shares of publicly listed companies are bought and sold.

Unit trust : An open-ended mutual fund that invests funds in securities and issues units for sale to the public. It can repurchase these units at any time.

Yield : The aggregate return earned on an investment, taking into account the dividend/interest income and its present market value.