Glossary of Stock Trading and Investment Terminology

Ethical Investing


Ethical investing is a kind of investment policy that involves targeting those managed funds or stocks which follow a set of ethics when investing. Ethical investing is also known as "green investing" and "socially responsible investing". Investors involved in ethical investing do want to maximize their profit through their investments but at the same time wants to play a constructive role for the welfare of the society.

Grossing Up The Dividend


The rate of return from the dividend payments after taking the benefits of imputation credits (also known as franking credits) to the investors in account is measured through grossing up the dividend.

In the past, dividend yields were quoted by dividing the dividend of the full year in cents per share by the market price in cents per share. This way, the result could be compared very easily and accurately with the yields generated by the other type/form of investments.

Annual Report


An annual report is an audited report that public companies are required to file. It details the preceding year's financial results and plans for the upcoming year. The document is available to shareholders and is released at the end of each fiscal year. In general, annual reports include financial data, audit report, management position, company information and data relevant to investors that is presented both in text and graphic form.

Term Deposit


A term deposit is an account held in a financial institution that has a fixed term, generally with maturities ranging from a month to a few years. This means that your funds are tied up. In the event that you need to pull out your money, the banking institution will charge you a fee for breaking the term of your deposit.

Borrowing to Invest


“Borrowing to invest” refers to borrowing money from a lender or financial institution to buy shares, bonds or managed funds. It is similar to taking out a mortgage to buy a house, land or any other property. This is a common practice among the investors and considered as an effective financial strategy as long as the entire procedure is managed properly. The whole idea of “borrowing to invest” is to invest more money in the market (stock market or managed funds) to increase profitability.

Bull Market


A bull market happens when stock prices rise significantly (historically, 50 percent increases or more) and the market is on an upward trend. The name bull market can also refer to bonds and currencies. Investors usually get more confident in a bullish market and begin to buy shares for higher returns on their capital.

International Shares


These days every now and then people make this statement that “the world is getting smaller” and this is very much true for the financial world too. Now you do not have to keep your focus only on your domestic stock exchange and indexes to make investments but can spread your area of investment even further in the other markets of the world by trading globally. These days trading CFDs over international shares and indices is very much possible and a lot of investors are doing it at a regular basis.

Some Drawbacks to Trading International Shares

Risk Free Rate


Risk free rate is the minimum rate you get from a zero risk investment. As there is no such thing as a risk-free investment, this rate is theoretical. In practice, short-dated Government bonds—which are regarded as stable—are often used as the risk free rate.

BRIC


BRIC is an acronym for the group of four big emerging economies - Brazil, Russia, India and China, also called the "Big Four." For many businesses, these countries represent very good expansion opportunities due to low production costs. In 2003, Goldman Sachs reported that India and China could become the world’s biggest providers of services and manufactured goods while Russia and Brazil could turn into the main raw material suppliers.

Separately Managed Accounts (SMAs)


SMA's or Separately Managed Accounts are those accounts that are managed professionally, offering certain benefits over the managed funds. In case of an SMA, the securities remain visible as well as portable as if the securities were bought directly. In addition to this, you will hold the ownership of the underlying shares and not only the units in a fund. This means that you will be able to manage your tax position more efficiently and won’t have to cop the accrued capital gains which often turn out to be a part of the unit price as far as managed funds are concerned.

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