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General Terms

Assets (fin.)
Recourses of the company that should bring it profits in future. Assets can be fixed and operating; 2) any financial instrument (securities, currency, precious metals, other goods) that are participating in transactions at stock market and at OTC market.

A physical or juridical person that owns one or more shares of the company ordinary or preference.

A society the authorized capital of which is divided in a definite number of shares; its participants (stockholders) are not responsible for its obligations and do not bear the risk of losses related to the society’s activities in terms of the price of their own shares.

Capital Stock
A nominal value of the shares that reflects the rights of possession of the stock corporation.

A share that confirms the right of its owner to participate in the administration process of the stock corporation, to receive the correspondent part of its profits and get a part of the property of the latter in case of its liquidation. Such a type of shares can be considered a kind of an unlimited credit which has been given by the shareholder in exchange for the profit participation.

The term that signify shares sold without the right to dividends: during the period between the data of the dividends announcement and the date of their repayment. The buyer of such a share doesn’t have the right to receive the announced dividends. For example, the dividends on auctions were announced on Friday (record date). NYSE announces the auctions to be without dividends during the market opening on previous Wednesday (2 commercial days from the date of the dividend announcement). In other words the person who has bought the shares on Wednesday or later doesn’t have the right to dividends.

Cum Dividend
The term that signify that a share is sold with right to dividends.

A premium which the portfolio managers hope for in case when the market norm of profits turns out to be equal to the rates of the promissory notes – premium zero in case of the market norm of profit. Positive Alpha indicates to the fact that the investor has succeeded in getting the premium that is more than the one that exists at a definite level of the market volatility. Negative Alpha indicates to the fact that the investor’s capital investments on average have brought to him the premium that is not lower to the one that exists at a definite level of the market changeability.

The candle configuration. It’s an exclusive model in terms of its influence that signify «the filling of price gap» and consists of five candles. Anaume appears during the gap filling after the direction changeability of the market price. This model usually appears along with other formations that reflect strong Positive Alpha

American Depositary Receipts. ADR
The shares issued by American banks to testify the indirect possession of the shares of foreign companies. The indicated shares are held in the depositary of the country’s bank where the company is registered.

American Option.
The option that can be carried out on any day before its expiry (see also European Option).

Simultaneous purchase and selling of identical or similar securities at different markets on at favourable price difference.

A Priory
Known beforehand

Beta Coefficient
The index of the sensitivity of shares in relation to the movement of the rest of the market (S&P500 в США). The unit of measure of market/indiversable risk related to any share. It is defined by means of correlation between the historic profits of a separate share and the historic profit of the stock market. If the share’s price has increased to 10%, Beta of the share will be equal to 1,2. It can defined also as a volatility unit that shows the share movement in relation to the index or the average value. For example, Beta of 1,5 signifies that the share can go up or down at more than 50% in comparison to the Dow Jones index or other index that it is based on.

Block trades
Big transactions regarding one particular share that have the form of a block.

Market trade inside of a definite range of prices or a price zone that do not have any tendency.

Broker-Dealer (B/D)
A physical or juridical person who carries out transactions with shares both at one’s own expense and at the expense of the client.

A physical or juridical person who carries out transactions with shares by order of the client for a certain commission.

Broker's Deck
The Broker’s place at the stock exchange where he carries out orders from the clients staying outside.

The investor that creates his strategy counting on the rate growth of the shares of the company, the economic sector or the whole market in general.

Balance value of one share
The balance value of the corporation funds divided to the quantity of shares in circulation.

A share purchase offer. It includes the price and the quantity of assets.

Bookkeeping Profit
The difference between the expenditures and the profits plus the dividends paid to the shareholders.

Margin of variations.
The sum of cash money that is needed to pay for the margin according to the futures contract.

The dividend repayment by shares
The operation by means of which the share of a new emission era distributed between the shareholders in proportion to their own number of shares. The repayment of dividend by shares presupposes the transfer of a part of the remained profit to the authorized capital the sum of which is equal to the market value of the distributed shares.

Blow-off top
An excessive and impetuous price growth that is followed by the same fall.

Breakaway Gap
A situation when the price rises sharply from the previous diapason leaving the price zone where there is no trade which is reflected on the bar diagram as empty spaces. Often the price gaps appear after the termination of important graphic models and may mean significant market changes.

The generally accepted principles of the bookkeeping. The rules of bookkeeping established by the competent American organizations such as the Board For Bookkeeping Standards.

Guaranteed Placement.
The process of new securities distribution carried out by investment banks at the primary market.

Hypothesis Of Expectations.
A hypothesis about the fact that the futures price of an asset corresponds to the expected price on the date of the futures contract stipulation.

The register’s closing date.
The date when the shareholder must possess shares to have the right to the current dividend. It is defined annually by the board of directors of a corporation.

A variable that signifies the correlation between the value of every single dollar and every share’s profit that will be got after a certain period of time.

Discount Market Bond.
A bond that is sold at the secondary market at the price which is lower than the nominal one.

Assets increase or obligations regulation or both the processes that appear as a result of economic operations.

A share’s income.
The bookkeeping income of the corporation divided to the quantity of shares in circulation.

Income for paying off.
Every share with a fixed income – the interest rate, that would allow to get all the profits provided by the latter, or a discount rate the makes equal the value of the future shares repayments and the current market price of the latter.

Make A Market
The term that signifies the maintenance by the market-maker of the firm quotations on certain shares thanks to his readiness to buy and to sell full lots at the announced prices.

The distribution of the company’s profits between its shareholders. The decision about the dividends repayment is taken at the General Assembly being presented by the board of directors.

A physical or juridical person who carries out transactions with shares at one’s own expense and in one’s own name by means of the public price announcement of purchase or selling of certain shares.

Stock Split
The quantity increase of shares in circulation by means of reduction of their nominal value with the purpose of attraction of small investors. The nominal value of all the shares in circulation doesn’t change. For example: if a share at the price of $100 is divided in two 2, the shareholder of 100 shares will receive 200 shares at the price of $50.

The bonds placed out of the boundaries of the borrower’s country and out of the country in the currency of which their nominal value has been indicated.

European Option.
An option that can be carried out only on the day of its expiry. (see also American option).

Announcement with a limited amount.
A commercial order that establishes the maximum price for the broker to carry out a transaction.

Investment Strategy
The strategy used during the funds placement in different financial assets (shares and bonds)The choice of the investment strategy depends on the state of both economy and the investor (disposition to risk, investment purposes, existing funds) .

Placing of funds in different assets with purpose of profit receipt, the capital increase. At the same time for the investor are very important security and liquidity of investment.

A physical or juridical person who possess his own financial assets.

Investment Policy.
A part of the investment process including the definition of the investor’s purposes, in particular, his preferences in relation to risk and profitability.

Index of consumer prices.
The index of the cost of living that reflects the rise of prices on the goods and services consumed by the population.

Market Index.
The index which is calculated on the basis of a certain quantity of shares to reflect the situation at the concrete financial market of assets.

Insider (an informed person).
Every person who has the access to the information which is hidden to the public and influence the share prices of a certain corporation.

The process of the buying attitude decrease of a certain currency or a relative change of the price index for a definite period of time. In other words it’s a percentage change of the buying attitude of a monetary unit for a certain time period

Brokerage Commission
A sum of commitment fee paid to the Broker by the client for carrying out a transaction with shares. Often depends on the price of the transaction or on the quality of the shares being sold (bought).

Convertible Preferred Stock
A preference share which can be converted into an ordinary one in one and the same company according to the wish of its owner and the conditions of placement.

Reverse Split
A procedure of quantity reduction of the shares in circulation by means of increase of its nominal value while the total value of all the shares of the company being in circulation remain unchangeable. For example: at the consolidation «1 for 2» the owner of 1000 shares at $4 will be able to exchange them for 500 new shares at $8.

Reverse Split
Preference shares that give the right to receive the dividend accumulated in the past years. Such shares have priority in relation to the ordinary ones.

Clearing House.
An organization created by banks, brokerage institutions and other financial mediators that register all the transactions carried out by its members during a commercial day. At the end of the day it strikes a balance according to the shares and funds for each company and pay for the services of the clearing center but not to the direct contractors.

Quoted Share.
A share accepted to the stock exchange circulation.

Retention Coefficient.
A fraction of the company’s profits that is not paid to the shareholders and remains at the company’s disposal.

Coupon Rate.
A sum of coupon payments for a year expressed in percent taken from the nominal value of bonds.

Coupon payments.
Periodical payments of the interest profit for one bond.

The possibility of fast and profitable transformation of assets into money. For example: the possibility to carry out transactions with shares without a sharp change of their rate.

Preferential placement.
The selling of shares to shareholders of the company in proportion to the their own quantity of shares.

Market Maker
A dealer who is responsible for the quotations maintenance of particular companies. In other words, it’s a public obligation to sell and to buy shares according to the announced prices. This barging system is used for shares with limited liquidity.

The investor that builds one’s strategy counting on the prices decrease covering the whole market, e market segment or shares of separate companies.

Marginal Account.
The account of an investor in a brokerage company by means of which one can buy shares with the help of a brokerage credit or sell shares borrowed from the broker.

Constant Growth Model.
A model of dividend calculation which presupposes a constant dividend increment.

A situation of growth of commercial positions created beforehand. Often it happens with the help of opening of new positions. It’s the first of the tree phases during which investors buy shares. In a general meaning – it’s a profit addition received in the form of dividends, interests to the principal sum of assets and treating such a profit as capital.

Physically existing goods that provide for the futures contracts.

Accumulated dividends.
A general quality of preference shares. Emission corporation must repay all the unpaid dividends on these shares before the charge of dividends on ordinary shares.

Accumulated Interests.
Interests accumulated but unpaid.

National Association of shares dealers. It’s an autoregulated organization that establishes the rules for its members and regular the activity of brokers and dealers at unlisted share market.

National Association of Securities Dealers Automated Quotations (NASDAQ).
Automatic quotations NASD. An automatic international telecommunication net that is controlled by NASD and is uniting dealers and brokers at unlisted share market.

Non-standard Lot.
The quantity of shares (often from 1 tо 99) which is less than a standard commercial unit.

Nominal Income.
A percentage change of value of financial assets without taking into consideration the influence of inflation.

Nominal Value.
The nominal value of a share in accordance with the bookkeeping books of the corporation.

Nominal Value of a bond.
Nominal value that will be paid to its owner on the date of paying off.

Face Value
The price indicated on the face of a share.

Investment level bonds.
The bonds with a rating that satisfy the requirements of the majority of the institutional investors, in particular, the ones regulated by the financial institutes. Often these bonds have ratings not less than ВВВ (Standard & Poor's) or Baa (Moody's).

Ordinary Stock
A share that certify the ownership rights of a shareholder for a certain fraction of the company’s capital. The shareholder get voting authority during the elections to the board of directors, define the company’s policy, approve dividends, and have the right to receive the announced dividends. During the corporation’s liquidation the requirements of the shareholders of ordinary stock are satisfied last of all.

Option "call" or a purchase option.
A contract that gives the right to buy a certain quantity of assets at a fixed price during a certain period of time.

Option "put".
The contract that gives the right to a purchaser to sell to an option seller a certain quantity of assets at a fixed price during a certain period of time.

The contract stipulated between two investors where the option seller presents to the buyer the right to buy (or to sell) a certain asset at a certain price during a certain period of time.

Open Claim.
A commercial claim that stay in force until its fulfillment or revocation by the investor.

Open Position.
The quantity of futures contracts that are unrealized at the present moment.

An offer to sell shares. It includes the price and the quantity of assets.

Potential losses of economic profits in future. They are divided into ones long-term and short-term depending on the repayment term.

The difference between the expected price and the real price defined by means of an auction or a commercial bargain. In the technical analysis this term is used to define the change of the market opinion. In the sphere of public sale it signifies a price shift.

Bayes Decision Rule
The rule that defines that the strategy chosen from all the others accessible must provide for the biggest repayments expected. Such an approach is based on the principal of maximum usage of the information, its constant review and revaluation.

This term is used in the option defining, and indicates to the proximity of the current price to the current price of the basic instrument on which the option has been issued.

Mutual Fund.
An investment company with a limited term of functioning that forms its initial capital at the expense of investor’s money and uses the profits for the formation of a certain portfolio of shares (often bonds).

Wholesale Transaction.
An order to sell or to buy a big amount of shares.

Primary Stock Market.
A market where issuers place new shares.

Floating Rate.
An interest rate on a financial asset that can change depending on the certain index of the current interest rates at the financial market.

The operations carried out by means of a margin account. The operations on shares with the use of a brokerage credit "lever".

Maximum Price.
The price nominated in the claim that defines the maximum price of a purchase or of a selling according to which the claim should be satisfied.

Liquidity Premium.
Expected increase of income of long-term shares that compensate to the investors the high risk of change of the interest rate related to the long-term shares acquisition.

Risk Premium.
The difference between the expected income related to the risk bond repayment and the expected income related to the repayment of a bond without risk.

Equity Capital Income
The correlation between the income on a share and the balance value of the company taking into consideration one share.

Selling "without covering", "short" selling.
The selling of a share borrowed from the broker. Later on the investor pays it bach buy the same share at a public sale

Preference Stock
The shares that give to their holder a number of privileges in comparison with a holder of ordinary shares (in particular the right to receive fixed dividends) but do not give a voting right. In case of the company’s liquidation the requirements of the holder of preference shares have priority over the ones of the holders of ordinary shares.

A situation when the market price leaves the area of the previous tendency.

A decrease of assets or an increase of obligations or the combination of both the fenomena appeared in the result of economic operations aimed at profit receipt.

Emerging Markets.
Financial markets in the countries with a low level of GDP, acceptable economic and political stability, currency convertibility and accessibility of shares for foreign investors.

Calculating Price.
A representative price of a futures contract that is defined on the basis of medium prices at the closing of the futures stock exchange.

Real Income.
A percentage change of investment value taking in consideration the inflation of a certain period.

Real Investments.
Investments in real assets such as land, buildings, equipment.

An organization authorized by a corporation that is liable for the emission and the revocation of share certificates during the shares placement or change of the owners.

Bond Rating.
The index that characterizes the credit reliability of the issuer.

Debt Refinancing.
Emission of a new obligation with the purpose of a term debt repayment which repayment term ends in the nearest future.

Buying Attitude Risk.
Investment risk related to financial assets in the result of indefiniteness caused by inflation which is equal to the value of real income of these assets.

Interest Rate Risk.
Uncertainty of income from a share with a fixed profit arising from unexpected fluctuations of asset value because of change of the interest rate.

Uncertainty related to the investment value at the end of the investment period.

Market Capitalization.
The total value of a share which is equal to the product of the market price of a share and the quantity of shares issued in circulation.

Market Order.
The order of a client to the broker of an immediate purchase (selling) of a security at the best current price.

An agreement about purchase/selling of securities or other assets in oral, written or electronic form.

A market participant who speculates on the price fluctuation that happen during very short time periods even during several minutes.

Investments in risk assets that give the possibility to receive potentially higher profits but at the same time presuppose a higher level of investment losses.

Syndicate (a buying group)
A group of investment banks that are liable for purchase of securities from the issuer and their following selling during the initial placement.

A form of corporative absorption during which two companies unite their operations and become one company. The merger usually is a result of negotiations between managers of merging corporations.

A market at which the exchange of assets into money takes place during the transaction.

Correlation "price-income".
Correlation between the current price and its income.

Correlation between the options "put" and "call".
The link between market prices of the options "put" and "call" that were prescribed on the same price, have the same term of functioning and the same corresponding assets.

Claim Specification.
The investor’s instruction to the broker related to the concrete characteristics of a commercial claim including the name of the company, the order to buy or to sell, the content, the maximum term of functioning and the claim’s type.

Standard lot.
The quantity of shares that is equal to a standard commercial unit, often 100 or a multiple number.

A commercial claim defining the “stop” price. If a security value reaches this price, the claim enters into force.

The price defined by the investor during the presentation of the stop-claim with price limitation and the definition of the term when the latter enters into force.

A participant of stock trade that buys or sells securities at his own expense or by order. It can be an employee of a brokerage company or a financial institute selling or buying securities for the company or its clients.

Current Bond Income.
A sum of coupon payments expressed in percent taken from the current market price of the bond.

Theory of liquidity preference.
Explanation of the dependence of interest rates on the time - frame. It is considered that such a dependence is the result of investors’ preference of short-term securities. Investors will buy long-term securities only in case of their high level of profitability.

Theory of market segmentation.
It’s one of the explanations of the dependence of interest rates on terms. It is considered that investors and creditors prefer certain terms of investments on the base of their personal preferences and habits. The current rates in every market segment are defined by the conditions of demand and supply.

Technical Analysis.
E section of analysis of securities dedicated to the price forecasting based on the data of quotations and the volume of transactions.

An official agent of the company, usually a bank, managing the transfer of shares of the corporation during the change of its owners.

An extraordinary increase of speed of the price movement.

Stock Market
A market of securities that provide for the mechanism of savings transformation into investments and their optimal distribution in different sectors of economy.

Factual Margin.
The difference between the market price of securities and the credit size on the investor’s account at a certain broker. Such a difference is expressed in percent taken from the market value of assets (for ordinary operations) or liabilities (for “short” selling).

Financial Market or Security Market.
A mechanism that provides for the exchange of financial assets by means of uniting sellers and buyers of securities.

Financial Lever.
The use of borrowed capital for partial investment financing.

A lateral market movement, a certain price movement: neither up nor down.

Forward rate.
An interest rate connecting the current rates for one period and for a more long period of time or an agreed between two parties interest rate paid in future in accordance with the agreed sum of money.

Fundamental Analysis.
A direction in the securities analysis that try to define their real value on the basis of economic factors related to them. The real values are compared with the current prices in order to define the deviations.

Futures Contract.
An agreement between two investors according to which the seller undertakes to supply the buyer with a certain amount of securities at the agreed price that is paid on the day of delivery.

An investor that buys futures contracts and/o options to protect oneself from the risk related to the possible price change.

Shares, bonds and derivative financial instruments (futures or optional contracts).

Closing Price.
The price of the last transaction on the previous day on a certain security.

Execution Price ("strike").
The price at which the option buyer can purchase (in case of the option “call”) or sell (in case of the option “put”) an asset for which the option has been issued. For futures – it’s the price of the contract execution.

Opening price.
The price of the first transaction on a certain security after the stock exchange opening.

Net Asset Value.
The market value of assets of the company excluding all the obligations.

A procedure of emission and placement of securities.; 2) the securities of one and the same issuer having the same conditions of the initial placement and providing the equal rights to their owners.

Economic Profit.
The changes of economic value of the company plus the dividends paid to the shareholders.

Day Off Effect.
An empiric law according to which the shares profits on Mondays turn out to be lower than on other days.

Holiday Effect.
A regularly observed increase that exceeds the norm of share profits on the day that precedes holidays.

Small Company Effect.
Empirical dependence of the profitability of shares on the value of their market capitalization. Taking in consideration risk, shares with smaller capitalization turn out to be better during long time periods than the shares with high capitalization.

January Effect.
Empirical law that consists in the fact that share profitability as a rule is higher on January.

Efficient Market.
A market at which the price of every single security during every time period corresponds with its investment value. Thus, all the important information about the market is immediately reflected in the market prices.

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