Average Annual Return
The percent profit your Mutual Fund or your portfolio of shares is making on a yearly basis. If the report period is shorter or longer than a year, the average annual return is converted to an annual rate.

Bearish Market
A prolonged period of falling prices in a stock market. The adjective ‘Bearish’ describes an opinion or outlook that expects a decline in price, either by the general market or by an underlying stock, or both.

Bid Price
The price at which a buyer is willing to buy an option or stock.

Bluechip
A stock considered reliable with regard to dividend income and capital value is called Blue chip. Such shares of renowned companies with established and stable businesses can offer the investors a steady flow of earning.

Bond
It is a promissory note issued by a company or government to the lenders. A bond invester lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a predetermined maturity date alongwith a specified amount of interest.

Bonus Share
A share issued by companies to their shareholders free of cost by capitalisation of accumulated reserves from the profits earned in the earlier years.

Book Closure
Dates between which a company keeps its register of members closed for updating. It happens prior to payment of dividends or issue of new shares.

Brokerage
Brokerage is the commission charged by the broker for selling or buying securities. SEBI determines the maximum brokerage chargeable in India.

Bullish Market
A rising market with abundance of buyers and few sellers. ‘Bullish’ Describes an opinion or outlook in which one expects a rise in price, either by the general market or by an individual share.

Circuit Breaker
When price of a stock increases or decreases by a certain percentage in a single day it hits the circuit breaker. Once the stock hits the circuit breaker, trading in the stock above (or below) that price is not allowed for that particular day.

Close-ended Mutual Fund
A mutual fund that allots units to investors only at the time of the New Fund Offer and which has a fixed tenure. The investors can redeem their units only after the completion of the tenure of the scheme.

Convertible Bond
Bonds that can be converted into common stock of the company at the option of the holder.

Corporate Dividend
The portion of net income earned by a company that is distributed among its shareholders. It is usually declared as a percentage of the paid-up value or face value of the share. This pay-out is not guaranteed. The amount you receive may vary from company to company and year to year.

Correction
It is a temporary reversal of trend, usually negative, in share prices. This could be a decrease following a consistent rise in prices or an increase following a consistent fall in prices.
A short-term drop in stock market prices is generally viewed as bringing overpriced stocks back to a level closer to companies’ actual values. A healthy market will correct from time to time.

Debenture
A loan raised by a company, paying a fixed rate of interest and which is secured on the assets of the company. Interest on debentures must be paid by a company whether it makes a profit or not. If the debenture holders do not get paid, they can legally force the company into liquidation to realise their claims on the company’s assets.

Demat
Shares that are in the electronic form is called dematerialised shares or demat shares. Trading dematerialised shares is demat trading. Dematerialisation is the process by which shares in the physical form are cancelled and get credited them in the form of electronic balances, which are maintained at a depository.

EPS
It is Earnings per share, the amount of corporate earnings available to common stock shareholders. In other words, EPS is a company’s profit divided by its number of shares. If a company earned Rs. 2 crore in one year and had 4 crore shares of stock outstanding, its EPS would be Paise 50 per share.

Equity
The ownership interest of common and preferred stockholders in a corporation.
Equity Investments or Equities are those shares issued by a company which represent ownership in the company. Common and preferred shares are usually called equity stock.

ESOP
It is Employee Stock Option (Ownershop) Plan, that encourages employees to buy the stock of their employer. ESOP gives to an employee shares of stock in the company as a deferred compensation benefit.

Initial Public Offer (IPO)
When a company offers its shares to the public for the first time, it is known as an Initial Public Offer.

New Fund Offer (NFO)
When a mutual fund offers units of any of its schemes to the public for the first time, it is known as a New Fund Offer.

Open-ended Mutual Fund
Mutual funds which are open throughout the year for sales and repurchase. Investors can redeem their units on all working days.

Security Transaction Tax (STT)
A tax on any purchase or sale of securities on any stock exchange in India.

Technical Analysis
The method of predicting future stock price movements based on observation of historical stock price movements in the market.