Rate of Return: A percentage showing the amount of investment gain or
loss against the initial investment.
Real Interest Rate: The net interest rate over the
inflation rate. The growth rate of purchasing power derived from an investment.
Redemption Value: The value of a bond when redeemed.
Reinvestment Value: The rate at which an investor
assumes interest payments made on a bond which can be reinvested over the life
of that security.
Relative Strength Index (RSI): A stock’s price that changes over
a period of time relative to that of a market index such as the Standard &
Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and
100 being the best.
Repurchase Agreement: An arrangement in which a security is
sold and later bought back at an agreed price and time.
Resistance Level: A price at which sellers
consistently outnumber buyers, preventing further price rises.
Return: Amount of
investment gain or loss.
Rescheduling of Payment: Rearranging the repayment
of a debt over a longer period than originally agreed upon due to financial
difficulties of the borrower.
Restrictive Endorsement: Where endorser desires that
instrument is to be paid to particular person only, he restricts further
negotiation or transfer by such words as "Pay to Ashok only". Now
Ashok cannot negotiate the instrument further.
Right of Appropriation: As per Section 59 of the Indian
Contract Act, 1972 while making the payment, a debtor has the right to direct
his creditor to appropriate such amount against discharge of some particular
debt. If the debtor does not do so, the banker can appropriate the payment to
any debt of his customer.
Right of Set-Off : When a banker combines two
accounts in the name of the same customer and adjusts the debit balance in one
account with the credit balance in other account, it is called right of
set-off. For example, debit balance of Rs.50,000/- in overdraft account can be
set off against credit balance of Rs.75,000/- in the Savings Bank Account of
the same customer, leaving a balance of Rs.25,000/- credit in the savings account.
Rights Issue: An offer by way of rights to current holders of
securities that allows them to subscribe for securities in proportion to their
existing holdings.
Risk-Averse, Risk-Neutral, Risk-Taking:
Risk-averse describes
an investor who requires greater return in exchange for greater risk.
Risk-neutral
describes an investor who does not require greater return in exchange for
greater risk.
Risk-taking describes
an investor who will accept a lower return in exchange for greater risk.
Safe Custody: When articles of value like jewellery, boxes, shares,
debentures, Government bonds, Wills or other documents or articles are given to
a bank for safe keeping in its safe vault, it is called safe custody.. Bank
charges a fee from its clients for such safe custody.
Savings Bank Account: All banks in India are having the
facility of opening savings bank account with a nominal balance. This account
is used for personal purposes and not for business purpose and there are
certain restrictions on withdrawals from this type of account. Account holder
gets nominal interest in this account.
Senior Bond: A bond that has priority over other bonds in claiming
assets and dividends.
Settlement: Conclusion of a securities transaction when a customer
pays a broker/dealer for securities purchased or delivered, securities sold,
and receive from the broker the proceeds of a sale.
Short Hedge: A transaction that protects the value
of an asset held by taking a short position in a futures contract.
Short Position: Investors sell securities in the hope that they will
decrease in value and can be bought at a later date for profit.
Short Selling: The sale of borrowed securities, their eventual
repurchase by the short seller at a lower price and their return to the lender.
Speculation: The process of buying investment vehicles in which the
future value and level of expected earnings are highly uncertain.
Stock Splits: Wholesale changes in the number of shares. For
example, a two for one split doubles the number of shares but does not change
the share capital.
Subordinated Bond: An issue that ranks after
secured debt, debenture, and other bonds, and after some general creditors in
its claim on assets and earnings. Owners of this kind of bond stand last in
line among creditors, but before equity holders, when an issuer fails
financially.
Substantial Shareholder: A person acquires an interest in
relevant share capital equal to, or exceeding, 10% of the share capital.
Support Level: A price at which buyers consistently
outnumber sellers, preventing further price falls.
Teller : Teller is a staff member of a bank who accepts deposits,
cashes cheques and performs other banking services for the public.
Technical Analysis: A method of evaluating securities
by relying on the assumption that market data, such as charts of price, volume,
and open interest, can help predict future (usually short-term) market trends.
Contrasted with fundamental analysis which involves the study of financial
accounts and other information about the company. (It is an attempt to predict
movements in security prices from their trading volume history.)
Time Horizon: The duration of time an investment is intended for.
Trading Rules: Stipulation of parameters for opening and intra-day
quotations, permissible spreads according to the prices of securities available
for trading and board lot sizes for each security.
Trust Deed: A formal document that creates a trust. It states the
purpose and terms of the name of the trustees and beneficiaries.
Underwriting : is an agreement by the underwriter to buy on a fixed
date and at a fixed rate, the unsubscribed portion of shares or debentures or
other issues. Underwriter gets commission for this agreement.
Underlying Security: The security subject to being purchased
or sold upon exercise of the option contract.
Universal Banking : When Banks and Financial
Institutions are allowed to undertake all types of activities related to
banking like acceptance of deposits, granting of advances, investment, issue of
credit cards, project finance, venture capital finance, foreign exchange
business, insurance etc. it is called Universal Banking.
Valuation: Process by which an investor determines the worth of a
security using risk and return concept.
Virtual Banking: Virtual banking is also called
internet banking, through which financial and banking services are accessed via
internet's World Wide Web. It is called virtual banking because an internet
bank has no boundaries of brick and mortar and it exists only on the internet.
Warrant: An option for a longer period of time giving the buyer the
right to buy a number of shares of common stock in company at a specified price
for a specified period of time.
Wholesale Banking: Wholesale banking is different
from Retail Banking as its focus is on providing for financial needs of
industry and institutional clients.
Window Dressing: Financial adjustments made solely
for the purpose of accounting presentation, normally at the time of auditing of
company accounts.
Yield (Internal rate of Return): The compound annual rate of
return earned by an investment
Yield to Maturity: The rate of return yield by a bond held
to maturity when both compound interest payments and the investor’s capital gain
or loss on the security are taken into account.
Zero Coupon Bond: A bond with no coupon that is
sold at a deep discount from par value.
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