An Investing Glossary

With so many investment specific terms an easy place to look up an unfamiliar word will be very useful. With this in mind we created the Marcus Today Glossary (A-H and I-Z).

All Ordinaries Index (XAO) – The predominant measure of overall Australian sharemarket performance. Made up of weighted average share prices Australia’s 500 largest listed companies, approximately. Established at 500 points at January 1980. More recently called the S&P/All Ordinaries.
ASX – Australian Stock Exchange– Australia’s national stock exchange for trading equities, government bonds and other fixed interest securities.
At the market – A term used to describe an order to buy or sell a stock at the best price obtainable at the time.
Appreciation – Refers to an increase in the value of an asset.
Ask price – The price at which a holder of an asset is willing to sell that asset (opposite of bid).
Basis point – One percent of one percent (0.01%).
Bearish – A view that markets will fall.
Benchmark – A yardstick used to compare performance of securities.
Bid price – The price that a prospective buyer is willing to pay for an asset (opposite of ask).
Broker – The intermediary who acts as the go-between in security transactions.
Brokerage – The fee charged by a broker for processing a securities transaction.
Bullish – Belief that prices in markets are going to rise.
Capitalisation or Market Capitalisation – A company’s share price multiplied by the total number of shares issued by that company.
Commodity – The term covers a wide range of items that can be traded, including metals and agricultural goods.
Dividend – Distribution of part of the company’s net profit paid out to shareholders, expressed as a number of cents per share. To receive a declared dividend the shares must be purchased before the ex-dividend date.
Equities – Synonym for shares and represents part-ownership of a company, as distinct from debt securities such as bonds and debentures.
Ex-dividend – Shares sold ex-dividend entitle the seller to retain the current dividend. Shares are usually quoted ex-dividend five business days before the company’s books close.
Financial year – The period over which a company measures its performance. The most common financial year ends on 30 June every year.
Institutional Investor – An organisation with large investable funds whose primary purpose is to invest its own assets or those held in trust for others.
Index – Is a means of measuring returns from and performance of a portfolio of selected investments. The S&P/ASX200 Index acts as a proxy for the overall performance of the larger vehicles in the market or sector.
IPO – Initial Public Offering – Initial capital raising by public subscription to securities, such as shares offered on the sharemarket for the first time. Also known as a Float.
Liquidity – This term relates to the speed at which an asset can be converted to cash.
Market value – The current value of a security.
Portfolio – A collection of different investments held by an investor.
Risk – The recognition that outcomes are uncertain. For more detail see credit risk, currency risk, interest rate risk and systematic risk.
Settlement date – The date, three days after the transaction, by which you must supply cash or documentation for a securities purchase or sale.
Securities – A financial instrument, which is a claim over an asset or a future income stream. Examples are bonds and shares.
Target or Price Target – Usually refers to a broker’s expected share price in 12 months’ time.
Yield – The total dividends received over the previous 12-month period expressed as a percentage of the current share price.

There are many more terms and much more you will need to know before you become an expert, but we hope our survival kit has given you the tools you need to help you take the first step.