Bear Market

A Market in which price are declining and sentiment is pessimistic (opposite of a bull market)

Bid Price
The price offered to buy shares or other investment instruments

Bull Market
A market in which prices are rising and sentiment is optimistic (opposite of bear market)

Bonus Shares
Shares issued free by a company to its shareholders on a prorate basis according to the number of shares owned. The bonus shares usually reflect the improved value of the company’s assets.

Call Market
The trading session at the South Pacific Stock Exchange when buying and selling orders for shares and other securities are matched upon on an “NETS X-Stream Trader” system

A term used by both individuals and companies to mean a supply of money e.g. a company’s loan capital refers to money borrowed and its share capital refers to money raised by issuing shares.

Capital Gain/Loss
The difference between the sale price of an asset and its cost.

Capital Gain Tax
A tax payable on the capital gain made when an asset is sold for more than its cost.

A legal entity under company law and as such can enter into contracts and can be sue or be sued. Companies can take different forms: including a company limited by shares where shareholder liability is limited to the amount of unpaid shares, accompany limited by guarantee where liability up to the amount specified in the Memorandum of Association and private companies that restrict the number of shareholders and the transferability of shares.

A person elected by the shareholders to be responsible for the management and operation of the company

The amount a company pays to its shareholders from its after tax earnings. Dividends are typically paid by the company or on a half yearly basis. For shareholders, this is a means of income from their investment. Dividends paid to shareholders of companies listed on the South Pacific Stock Exchange are tax-free.

Dividend Yield
The return on a share investment calculated by dividing he dividend rate (in cents per share) by the market price of the share.

Earnings Per Share
A measure of performance for a company calculated by dividing the tax operating profit of the company by the number of ordinary shares issued. The actual amount paid out of the earnings per share to the shareholder is the dividend per share.

Another name for company shares

Limit Order
An investor’s instruction to his or her broker on the highest price that they are prepared to pay for a listed share or the lowest price they are willing to accept when selling shares.

Listed Company
A public company listed on the stock exchange.

The winding up of the affairs of the company including the sale of its assets, settlement of its liabilities (if possible) and payment of any remaining cash to its shareholders.

Offer Price
The Price at which a person is willing to sell shares.

A written or verbal instruction given to a broker to buy or sell shares in specified listed companies with details of number of shares and price.

Ordinary Shares
The most common type of shares issued by a company representing an ownership interest in the company but generally exercises the greatest control and may gain the greater reward in the form of dividend and capital appreciation. If the company is wound up, ordinary shareholders generally rank behind secured creditors in the liquidation process. Ordinary shareholders have voting rights on matters of management and company policy at shareholders meetings.

Par Value
The value of a share set at the time of issue.

Price Earnings Ratio
A way of measuring how highly investors value the earnings a company produces. It is derived by dividing the market price of the share by the earnings per share or EPS. The amount a company earns ultimately determines what dividend it will pay. If the earnings are growing there is a good chance dividends will grow. Investors will pay more for the shares if they think earnings will grow. The price paid by an investor today reflects what income he/she thinks they will earn in future. The way of quantifying this is by relating EPS to price.

The surplus money gained in business transactions after expenses involved has been accounted for:

Preference Shares
Shares pay a fixed rate of dividend. Preference shares rank ahead of ordinary shares in the payment of dividends and on liquidation of the company

The money a person makes from an investment dividend. In the case of shares, this includes both dividend income and capital gains/losses.

Rights Issue
An offer made to existing shareholders to buy new shares in the company at a discount to the prevailing market price of the shares. The shares are offered to existing shareholders in proportion to the number of shares already held. Those rights not taken up by the shareholders are sold on the open market.

A measure of the variability of returns i.e. it may be higher or lower than you expect. The higher the variability of return, the greater the risk of the investment, the greater the return that investors expect, to compensate them for this greater risk and vice versa

Share Certificate
A document showing legal evidence of ownership of a stipulated number of shares in acompany. Also known as a Scrip.

Share Float
The decision to offer a company’s shares to the public for the first time.Also known as an initial public offering or IPO.

The owner of shares in a company who is normally entitled to dividends declared by directors and voting power in proportion to the shares they hold and if the company is dissolved, a claim upon the assets remaining when all debts have been paid.

The ownership of part of a company, a contract between the issuing company and the owner of the share giving the owner of the share an interest in the management of the company, the right to participate in profits and if the company is dissolved, a claim upon the assets remaining when all debts have been paid.

A licensed professional who acts as an agent to buy and sell shares on behalf of members of the public for a commission ( or brokerage fees).

Stock Exchange
A trading facility through which shares may be bought and sold by professional who stockbrokers according to fixed rules and operated under the strict supervision of the CMDA.

South Pacific Stock Exchange

The successful completion of a buying or selling order

Uncalled Capital
That part of a company’s issued capital, which has been not paid for by the shareholders.

The return on an investment usually expressed as an annual percentage over the initial investment




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