TERMS RELATED TOSTOCK MARKET

Group Members Monica Jain Vini Jain Kaajal Jain Hardik Malbari Tarun Lohar Nimanshi Jain

INDIAN FINANCIAL SYSTEM

FINANCIAL INSTITUTION

FINANCIAL INSTRUMENTS

FINANCIAL MARKETS

FINANCIAL SERVICES

BONDSBONDS

DEBENTURES

SHARES

CAPITAL MARKET

COMMODITY MARKET

FOREX

ATM

DEBIT CARD

CREDIT CARD

VAULTS

LEASING

Capital Market

Primary Market

New Issue Market

Initial Public

Offering

Secondary Market

BSE NSE

BULLS AND BEARS

A bull market is a description of the stock market when it is generally charging ahead and going up in value over a period of time. This is a good market for investors.

Remember, bulls CHARGE AHEAD!

A bear market is a description of the stock

market when it is generally going down in value over a

period of time. This is a bad market for investors.

Remember, bears HIBERNATE!

Venture capital Venture capitalist Treasury Bills Stock Certificates Commercial Papers

Equity Shares Preference Shares Convertible Shares Primary Market Secondary Market

Public Provident Funds Surplus Funds Mutual Funds Debt Capital Equity Capital

IPO Preferential Issue Issue Price Market Capitalization Price Discvery

Floor price Cut off price Price Band Right Issue Bonus Issue Book Building

Script A group B group S group T2T group Z group

Stock Stock Market Broker Sub-broker Brokerage

Interest Maturity Period Yield To Maturity Bonus Bonus Share

Commission

○ In this continuation of the previous example, a commission of $20 can take your returns from 18.7% down to 18.6% (100 shares), 17.3% (10 shares), 16% (5 shares) or 7% (1 share)

Years # of Shares Purchase Price Current Price Commission Fee Gain/Loss Pre-Fee Return After Fee Return3 1 55 92 20 17 18.7% 7.0%3 5 55 92 20 165 18.7% 16.0%3 10 55 92 20 350 18.7% 17.3%3 100 55 92 20 3680 18.7% 18.6%

Dividend

Years # of Shares Purchase Price Current Price Dividends Gain/Loss Return3 100 55 92 0.5 3750 18.9%3 100 55 92 1 3800 19.1%3 100 55 92 5 4200 20.8%

Intraday Trading v|s Delivery Trading

• Buying and Selling

on the same day.

• Brokerage will be

different for intra-day

and delivery based

trading, intra-day

being lesser

• Buying and Selling are on different days

• Brokerage will be higher than intra-day

Premium & Discount

ScriptName

Spot Price

Future Price

Pre/Disc

Suzlon 95.25 95.15 0.10 DiscountReliance 1980.85 1985.10 4.25 PremiumHindalco 104.10 102.30 1.80 DiscountNifty 4619 4621 2 Premium

e.g.

Define

• Infosys bags a deal worth $ 100000 from US

Company

• Rate of $ is Rs 48/-

• Amount to be realised after 2 months

• But Infosys estimates Dollar will fall to Rs 44/-

• Hence to reduce the loss Infosys will Hedge its

position by selling $ 100000 in Future Markets

Hedging

After Two months Infosys gets the Payment

Dollar price is Rs 44/-

So Infosys will bear a loss of Rs 4 per $ in Cash

Markets

and will gain a Profit of Rs 4 per $ in Future

Markets

In this way Infosys have Reduced the Risk of $

Price Fluctuation

Contd…..

What is auction???

Buyer Auctioneer Seller

DEPOSITORY DEPOSITORY

PARTICIPANT JOBBER PHYSICAL

SHARES

DEALINGS PORTFOLIO PORTFOLIO

MANAGEMENT LISTED

SECURITIES

Let me tell you a story about a “Chaalu Chaiwala”!

He was truly chaalu or shall we say, “Extra Smart”!!

ARBITRAGE

He would provide tea at Rs 5 per cup and his cost of preparing the

same was Rs 4.

Thus he made a profit of Rs 1.

But he was not happy with making a profit of

just Rs 1.

So he thought about he could increase his

profit.

It was then that he had a brainwave out of

the blue!

He identified a Government canteen which offered tea at

Rs 2.

BIG IDEA! Wasn’t it?

He could now simply buy tea for Rs 2 and sell

it for Rs 5 and make a much

better gain of Rs 3!

This buying of a thing in one market and selling in

another market at a higher price is known as

“Arbitrage”.

Similarly if arbitrage opportunities exist, stocks too can be

purchased in one market at a lower cost and sold in another at a higher

cost.

This buying of a thing in one market and selling in

another market at a higher price is known as

“Arbitrage”.

Similarly if arbitrage opportunities exist, stocks too can be

purchased in one market at a lower cost and sold in another at a higher

cost.

So for the next few days, our Chaalu Chaiwala had a field day earning happily as he served his

daily chai.

But Alas! Such arbitrage opportunities do not last long. As information flow increases and the arbitrage opportunity gets known, it soon starts to

disappear.

Fair value

Market value

Intrinsic value

Average cost

Par

Premium

Discount

Buy Back Share

Pay Back Share

Offer

Offer Price

Ask

Call

Call Option

Marginal Call

Put

Put option

Pay In

Pay Out

Buy on Opening

Buy on closing

Opening Price

Closing Price

Stop Loss Order

Open Order

Order cancellation

Prospectus

Limit Order

Day Order

Under Subscribed

Over Subscribed

•Security deposit•Clearing house

Dalal Street Wall Street

New York Stock Exchange (NYSE) 

National Association of Securities Dealers Automated Quotations (NASDAQ)

American Stock Exchange (AMEX)

•Seed capital•Market crash •Invest•Disinvest •Investment bank

•Franchise•Investment bank

• Dead cat bounce• Float• Rally• General obligation bond(GOI)• Default

•Credit ratio

•Short selling

• Public companies • Private companies• Kerb trading Securities and exchange

commission(SEC) Rollover