Common terms & definitions

AGM
Annual General Meeting. Normally held 3 weeks after the annual report has been published, these are attended by the company's shareholders who meet, discuss issues and vote over certain matters.

Bear Market
A market characterized by declining prices that are anticipated to fall further in the short to medium term future.

Bid Price
The price of shares can be sold by an investor in the stock market.

Blue Chip
A company perceived as a safe investment, usually seen as well established, with a solid reputation.

Broker
The agent who is the middle-man between the investor and the market. These professionals charge commission for their services.

Bull Market
A market characterized by prices that are rising and are expected to continue doing so in the short to middle term future.

Capital Gains
The profit made on stocks/ shares when sold. Capital Loss refers to loss on stocks.

Dividends
A payment made to stockholders , net of tax, typically twice per annum.

EBIT
Earnings before interest and tax.

Emerging Market
Term describing markets in developing areas / countries.

EPS
Earnings per share, worked out by dividing total profits by number if issued shares.

Ex Dividend
A date set by companies determining when shares sold before that time will not receive their dividend. Shares sold after this date will still receive the dividend.

Final Dividend
Dividend paid to investors at the end of the fiscal year.

Fiscal Year
The time-frame that runs between 6th April to 5th April of the following year, used for assessment of tax, income and capital gains.

Flotation
Also called an IPO, it is the term used when shares are issued for the first time onto the stock market.

FSA
Financial Services Authority, the regulatory body supervising the investment industry.

FTSE
Financial Times Stock Exchange Authority.

Hostile Takeover
When one company tries to buy a company out, against their wishes.

Inflation
Prices rising over a period of time.

Insider Trading
An illegal transaction involving price-sensitive information about a company used before it's made public. Violation of this carries a maximum of a seven year prison sentence or unlimited fines.

IPO
Initial Public Offering, where shares are first put onto the Stock Market. Also called Flotation.

Liquidity
Signifies how easy it is to buy or sell a stock. A market that is liquid describes one with a high number of shares in the public, with many trading equities.

LSE
London Stock Exchange.

Merger
When two companies come together, combining clients, assets and debts.

NET
The amount you'll receive once tax has been removed.

Offer Price
Also called the asking price, it refers to the price an investor can buy from the market.

PBT
Profit Before Tax.

Penny Shares
Stocks and shares that cost below £1. If successful they can rise sharply, but they can also drop sharply. Penny stocks and shares are may be listed on the Alternative Investment Market (AIM) or The Off-Exchange Market (OFEX). Others can be listed on exchanges abroad, whilst others will be unlisted.

P/E Ratio
The price to earnings ratio, which is worked out by dividing the share price by the company's EPS. The higher the P/E ratio is, the more positive the market views the future earning potential of the company.

Premium
The increase in price of a new stock, which is the opposite of a discount.

Private Placing
Shares not available to general public.

Prospectus
The information and details of a company typically published before the AGM.

Real Time
Current prices being used to trade on the market, with no delay.

Securities
Also called equities, it refers to stocks and shares issued to investors by the company.

Settlement
Transfering ownership of stocks, and cash, between the seller and the buyer.

Share Certificate
The certificate of a stock ownership.

Share Split
If a share price in a company has become large and grown in value, extra shares can be issued at a lower price to make them a better size. This doesnt change the 'real' value of the shares. Called a stock split in the US.

Spread
The difference between the price a share is bought and sold for.

Yield
This is the annual dividend earning of a share, divided by the share price.