Stock Market Glossary



Know the terms commonly associated with the stock market

Agent:
A securities firm is classified as an agent when it acts on behalf of its clients as buyer or seller of a security. The agent does not own the security at any time during the transaction.

All-or-None Order: An order that must be filled completely or the trade will not take place.

American-Style Options: Options that can be exercised any time during their lifetime. These are also known as open options.

Annual Report: A publication, including financial statements and a report on operations, issued by a company to its shareholders at the company's fiscal year-end.

Arbitrage: The simultaneous purchase of a security on one stock market and the sale of the same security on another stock market at prices which yield a profit.

Ask or Offer: The lowest price at which someone is willing to sell the security. When combined with the bid price information, it forms the basis of a stock quote.

Ask Size: The aggregate size in board lots of the most recent ask to sell a particular security.

Assets: Everything a company or person owns, including money, securities, equipment and real estate. Assets include everything that is owed to the company or person. Assets are listed on a company's balance sheet or an individual's net worth statement.

Assignment: The notification to the seller of an option by the clearing corporation that the buyer of the option is enforcing the terms of the option's contract.

At-the-Money: When the price of the underlying equity, index or commodity equals the strike price of the option.

Averaging Down: Buying more of a security at a price that is lower than the price paid for the initial investment. The aim of averaging down is to reduce the average cost per unit of the investment.

Basis Point: One-hundredth of a percentage point. For example, the difference between 5.25% and 5.50% is 25 basis points.

Bear Market: A market in which stock prices are falling.

Beta: A measurement of the relationship between the price of a stock and the movement of the whole market.

Bid: The highest price a buyer is willing to pay for a stock. When combined with the ask price information, it forms the basis of a stock quote.

Bid Size: The aggregate size in board lots of the most recent bid to buy a particular security.

Black-Scholes Model: A mathematical model used to calculate the theoretical price of an option.

Blue Chip Stocks: Stocks of leading and nationally known companies that offer a record of continuous dividend payments and other strong investment qualities.

Bonds: Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.

Book: An electronic record of all pending buy and sell orders for a particular stock.

Booked Orders: Orders that do not trade immediately upon entry. These orders are also known as outstanding orders.

Bought-Deal Underwriting: A type of underwriting where the brokerage firm acts as principal. The brokerage firm risks its own capital to purchase all of the securities to be issued. If the price of the securities decreases before the brokerage firm has had a chance to resell the securities to its clients, the firm absorbs the loss.

Broker or Brokerage Firm: A securities firm or a registered investment advisor affiliated with a firm. Brokers are the link between investors and the stock market. When acting as a broker for the purchase or sale of listed stock, the investment advisor does not own the securities but acts as an agent for the buyer and seller and charges a commission for these services.

Bull Market: A market in which stock prices are rising.

Business Day: Any day from Monday to Friday, excluding statutory holidays.

Buy-In: If a broker fails to deliver securities sold to another broker on the settlement date, the receiving broker may buy the securities at the current market price of the stock and charge the delivering broker the cost difference of such a purchase.

Call Option: An option which gives the holder the right, but not the obligation, to buy a fixed amount of a certain stock at a specified price within a specified time. Calls are purchased by investors who expect a price increase.

Capital: To an economist, capital means machinery, factories and inventory required to produce other products. To investors, capital means their cash plus the financial assets they have invested in securities, their home and other fixed assets.

Capital Gain or Loss: Profit or loss resulting from the sale of certain assets classified under the federal income tax legislation as capital assets. This includes stocks and other investments such as investment property.

Capital Gains Distribution: A taxable distribution out of taxable gains realized by the issuer. It is generally paid to security holders of trusts, partnerships, and funds. Like all distributions, it may be paid in securities or cash. The amount, payable date, and record date are established by the issuer. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement.

Capital Stock: All shares representing ownership of a company, including preferred and common shares.

Cash Dividend / Distribution: A dividend/distribution that is paid in cash.

Cash Settlement: Settlement of an option contract not by delivery of the underlying shares, but by a cash payment of the difference between the strike or exercise price and the underlying settlement price.

Certificate: The physical document that shows ownership of a bond, stock or other security.

Clearing Day: Any business day on which the clearing corporation is open to effect trade clearing and settlement.

Clearing Number: The trading number of the clearing Participating Organization or Member.

Client Order: An order from a retail customer of a Participating Organization.

Closing Transaction: An order to close out an existing open futures or options contract.

Commission: The fee charged by an investment advisor or broker for buying or selling securities as an agent on behalf of a client.

Commodities: Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.

Common Shares or Common Stock: Securities that represent part ownership in a company and generally carry voting privileges. Common shareholders may be paid dividends, but only after preferred shareholders are paid. Common shareholders are last in line after creditors, debt holders and preferred shareholders to claim any of a company's assets in the event of liquidation.

Complete Fill: When an order trades all of its specified volume.

Continuous Disclosure: A company's ongoing obligation to inform the public of significant corporate events, both favourable and unfavourable.

Convertible Security: A security of an issuer (for example - bonds, debentures, or preferred shares) that may be converted into other securities of that issuer, in accordance with the terms of the conversion feature. The conversion usually occurs at the option of the holder of the securities, but it may occur at the option of the issuer.

Corporation or Company: A form of business organization created under provincial or federal laws that has a legal identity separate from its owners. The shareholders are the corporation's owners and are liable for the debts of the corporation only up to the amount of their investment. This is known as limited liability.

Daily Price Limit: The maximum price advance or decline permitted for a futures contract in one trading session compared to the previous day's settlement price.

Day Order: An order that is valid only for the day it is entered. If the order is still outstanding when the market closes, it will be purged overnight.

Debenture: A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.

Defensive Stock: A stock purchased from a company that has maintained a record of stable earnings and continuous dividend payments through periods of economic downturn.

Delayed Delivery Order: A special term order in which there is a clear understanding between the buying and selling parties that the delivery of the securities will be delayed beyond the usual three-day settlement period to the date specified in the order.

Delist: The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.

Delisted Issue: The status of a security that is no longer listed on the stock exchanges. The security could trade on another market.

Delivery: The tender and receipt of the underlying commodity or the payment or receipt of cash in the settlement of an open futures contract.

Delivery Month: The calendar month in which a futures contract may be satisfied by making or taking delivery.

Delta: A ratio that measures an option's price movement compared to the underlying interest's price movement. Delta values have a range of 0 to 1. Deep in-the-money options have deltas that approach 1.

Demand: The combined desire, ability and willingness on the part of consumers to buy goods or services. Demand is determined by income and by price, which are, in part, determined by supply.

Diversification: Limiting investment risk by purchasing different types of securities from different companies representing different sectors of the economy.

Dividend: The portion of the issuer's equity paid directly to shareholders. It is generally paid on common or preferred shares. The issuer or its representative provides the amount, frequency (monthly, quarterly, semi-annually, or annually), payable date, and record date. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement. An issuer is under no legal obligation to pay either preferred or common dividends.

Dividend Reinvestment Plan: A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company.

Dividend Yield: Equal to the indicated annual dividend rate per share divided by the security's price. For example, if the indicated dividend rate is Re. 1 and the closing price is Rs. 50, Re. 1 divided by Rs. 50 equals 2%.

Dividend/Distribution Payable Date: The date set by the issuer on which the dividend/distribution will be paid.

Dividend/Distribution Record Date: The date on which a security holder must be registered as a holder of an issue to receive the dividend/distribution.

Rupee Cost Averaging: Investing a fixed amount of dollars in a specific security at regular set intervals over a period of time. Rupee cost averaging results in a lower average cost per share, compared with purchasing a constant number of shares at set intervals. The investor buys more shares when the price is low and buys fewer shares when the price is high.

Equities: Common and preferred stocks, which represent a share in the ownership of a company.

Equity Option: An option contract that grants the holder the right to buy or sell a specific number of shares of stock at a specified price during a specific period of time.

Equity Price: The price per share traded.

Equity Value: The total dollar value of volume traded on one side of the transaction for a specified period. It equals price multiplied by volume.

Equity Volume: The total number of shares traded on one side of the transaction.

Escrowed Securities: The outstanding securities of an issuer that are not freely tradable, because they are subject to an escrow agreement that restricts the ability of certain security holders of that issuer from trading or otherwise dealing in those securities until certain conditions are satisfied.

European-Style Option: Options that can be exercised only on their expiration date.

Ex Dividend: The holder of shares purchased ex dividend is not entitled to an upcoming already-declared dividend, but is entitled to future dividends.

Ex Right: The holder of shares purchased ex rights is not entitled to already-declared rights, but is entitled to future rights issues.

Exchange-Traded Fund (ETF): A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock.

Exercise: The act of an option holder who chooses to take delivery (calls) or make delivery (puts) of the underlying interest against payment of the exercise price.

Expiration Date: The date at which an option contract expires. This means that the option can't be exercised after that date.

Face Value: The cash denomination of the individual debt instrument. It is the amount of money that the holder of a debt instrument receives back from the issuer on the debt instrument's maturity date. Face value is also referred to as par value or principal.

Filing Statement: A disclosure document submitted by a listed company to outline material changes in its affairs. Filing statements are not used for the purposes of a financing.

Fill or Kill (FOK) Order: Is eligible to receive a full fill and if not fully filled is cancelled immediately.

Floating Rate Security: A security whose interest rate or dividend changes with specified market indicators. A floating rate is one that is based on an administered rate, such as a prime rate.

Frequency: Frequency refers to the given time period on an intraday, daily, weekly, monthly, quarterly or yearly perspective. Typically, choosing a weekly or monthly perspective when looking at several years of data makes it easier to identify long-term trends. Daily charts are useful for active traders and short-term time period charts. The "Daily", "1-Minute", "5-Minute", "15-Minute" and "Hourly" frequency are used for intraday charts and the remaining choices are applicable to end-of-day charts. This term refers to a TSX Group Historical Performance charting feature.

Front Month: The closest month to expiration for a futures or option contract.

Futures: Contracts to buy or sell securities at a future date.

Growth Stock: The shares of companies that have enjoyed better-than-average growth over recent years and are expected to continue their climb.

Hedge: A strategy used to limit investment loss by making a transaction that offsets an existing position.

Income Stock: A security with a solid record of dividend payments and which offers a dividend yield higher than the average common stock.

Index: A statistical measure of the state of the stock market, based on the performance of stocks. Examples are the Sensex and Nifty.

Inflation: An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.

Initial Public Offering (IPO): A company's first issue of shares to the general public.

Inside Information: Non-public information pertaining to the business affairs of a corporation that could affect the company's share price should the information be made public.

Insider: All directors and senior officers of a company, and those who are presumed to have access to inside information concerning the company. An insider is also anyone owning more than 10% of the voting shares of a company.

Insider Trading: There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.

International Securities Identification Number (ISIN): The international standard that is used to uniquely identify securities. It consists of a two-character alphabetic country code specified in ISO 6166, followed by a nine-character alphanumeric security identifier (assigned by a national security numbering agency), and then an ISIN check-digit.

Intrinsic Value: The difference between the current market value of the underlying interest and the strike price of an option. In-the-money is a term used when the intrinsic value is positive.

Investment: The purchase or ownership of a security in order to earn income, capital or both. Investments may also include artwork, antiques and real estate.

Investment Advisor: A person employed by an investment dealer who provides investment advice to clients and executes trades on their behalf in securities and other investment products.

Investment Capital: Initial investment capital necessary for starting a business. Investment capital usually consists of inventory, equipment, pre-opening expenses and leaseholds.

Investment Dealer: Securities firms that employ investment advisors to work with retail and institutional clients. Investment dealers have underwriting, trading and research departments.

Investor Relations: A corporate function, combining finance, marketing and communications, to provide investors with accurate information about a company's performance and prospects.

Issue: Any of a company's securities or the act of distributing the securities. Issued shares refer to the portion of a company's shares that have been issued for sale. A company does not have to issue the total number of its authorized shares.

Issue Status: The trading status of a class or series of an issuer's listed securities, such that a class or series of listed securities of an issuer may be halted, suspended, or delisted from trading.

Last Trading Day: The last day on which a futures or option contract may be traded.

Liabilities: The debts and obligations of a company or an individual. Current liabilities are debts due and payable within one year. Long-term liabilities are those payable after one year. Liabilities are found on a company's balance sheet or an individual's net worth statement.

Limit Order: An order to buy or sell stock at a specified price. The order can be executed only at the specified price or better. A limit order sets the maximum price the client is willing to pay as a buyer, and the minimum price they are willing to accept as a seller.

Liquidating Order: An order to close out an existing open futures or options contract. A liquidating order involves the sale of a contract that has been purchased or purchase of a contract that has been sold.

Liquidity: This refers to how easily securities can be bought or sold in the market. A security is liquid when there are enough units outstanding for large transactions to occur without a substantial change in price. Liquidity is one of the most important characteristics of a good market. Liquidity also refers to how easily investors can convert their securities into cash and to a corporation's cash position, which is how much the value of the corporation's current assets exceeds current liabilities.

Listed Issuer: An issuer that has at least one class of securities listed on Bombay Stock Exchange or National Stock Exchange.

Listed Stock: Shares of an issuer that are traded on a stock exchange. Issuers pay fees to the exchange to be listed and must abide by the rules and regulations set out by the exchange to maintain listing privileges.

Listing Application: The document that an issuer completes and submits to an exchange when it applies to list its shares on the exchange. The issuer must disclose its activities, plans, management and finances in the application.

Long: A term that refers to ownership of securities. For example, if you are long 100 shares of XYZ, this means that you own 100 shares of XYZ company.

Margin Account: A client account that uses credit from the investment dealer to buy a security. A client needs to deposit a margin amount with the balance advanced by the investment dealer against collateral such as investments. The investment dealer can make a margin call, which means the client must deposit more money or securities if the value of the account falls below a certain level. If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The investment dealer also charges the client interest on the money borrowed to buy the securities.

Market: The place where buyers and sellers meet to exchange goods and services. It also represents the actual or potential demand for a product or service.

Market Capitalization: It is the total value of the issued shares of a publicly traded company; it is equal to the share price times the number of shares outstanding.

Market Order: An order to buy or sell stock immediately at the best current price.

Mixed Lot or Broken Lot: An order with a volume that combines any number of board lots and an odd lot.

Mutual Fund: A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.

Naked Writer: A seller of an option contract who does not own a position in the underlying security.

Net Change: The difference between the previous day's closing price and the last traded price.

Net Worth: The difference between a company's or individual's total assets and its total liabilities. Also known as shareholders' equity for a company.

New Issue: A stock or bond issue sold by a company for the first time. Proceeds may be used to retire the company's outstanding securities, or be used for a new plant, equipment or additional working capital. New debt issues are also offered by governments.

New Issuer Listing: Occurs concurrently with the posting of the new issuer's securities for trading. The preconditions for listing include the acceptance by the Exchange that all listing requirements and conditions have been satisfied. The effective listing date is the date when the listed securities open for trading.

New Issuer Listing - IPO (Initial Public Offering): An IPO (initial public offering) is an issuer's first offering of its securities made to the public in accordance with a prospectus. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.

New Listing: A security issue that is newly added to the list of tradable security issues of an exchange. It is accompanied with a new listing date.

Odd Lot: A number of shares that are less than a board lot, which is the regular trading unit decided upon by the particular stock exchange. An odd lot is also an amount that is less than the par value of one trading unit on the over-the-counter market. For example, if a board lot is 100 shares, an odd lot would be 99 or fewer shares.

Offset: To liquidate or close out an open futures or option contract.

One-Sided Market: A market that has only buy orders or only sell orders booked for a particular security.

On-Stop (O/S) Order: A special-term order placed with the intention of trading at a later date when the price of the stock reaches the specified stop price. An on-stop order becomes a limit order once a trade at the trigger price has occurred.

Open Interest: The net open positions of a futures or option contract.

Open Order: An order that remains in the system for more than a day. See Good-Till-Cancelled or Good-Till-Date.

Option: The right, but not the obligation, to buy or sell certain securities at a specified price within a specified time. A put option gives the holder the right to sell the security, and a call option gives the holder the right to buy the security.

Option Type: A call or put contract.

Option Writer: The seller of an option contract who may be required to deliver (call option) or to purchase (put option) the underlying interest covered by the option, before the contract expires.

Over-The-Counter (OTC) Market: The market maintained by securities dealers for issues not listed on a stock exchange. Almost all bonds and debentures, as well as some stocks, are traded over-the-counter. An OTC market is also known as an unlisted market.

Par Value: A security's nominal face value.

Penny Stock: Low-priced speculative issues of stock selling at less than Re. 1 a share.

Portfolio: Holdings of securities by an individual or institution. A portfolio may include various types of securities representing different companies and industry sectors.

Position Limit: The maximum number of futures or options contracts any individual or group of people acting together may hold at one time.

Preferred Share: A class of share capital that entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated rupee value per share in the event of liquidation. It usually does not have voting rights, unless a stated number of dividends have been omitted.

Premium: An option contract's price.

Price-Earnings (P/E) Ratio: A common stock's last closing market price per share divided by the latest reported 12-month earnings per share. This ratio shows you how many times the actual or anticipated annual earnings a stock is trading at.

Private Placement: The private offering of a security to a small group of buyers. Resale of the security is limited.

Prospectus: A legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commission regulations. Prospectus documents usually disclose pertinent information concerning the company's operations, securities, management and purpose of the offering.

Put Option: A put option is a contract that gives the holder the right to sell a specified number of shares at a stated price within a fixed time period. Put options are purchased by those who think a stock may decline in price.

Rally: A brisk rise in the general price level of the market or price of a stock.

Real Estate Investment Trust (REIT): Typically, a closed-end investment fund that trades on an exchange and uses the pooled capital of many investors to purchase and manage income properties. Equity REITs primarily own commercial real estate, such as shopping centres, apartments, and industrial buildings. By taking advantage of the trust structure, REITs offer tax advantages (beyond traditional common equity investments) to investors and provide a liquid way to invest in real estate, which otherwise is an illiquid market.

Redeemable Security: A security that carries a condition giving the issuer a right to call in and retire that security at a certain price and for a certain period of time.

Registered Traders: A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill.

Retractable Security: A security that features an option for the holder to require the issuer to redeem it, subject to specified terms and conditions.

Revenue: The total amount of funds generated by a business.

Rights: A temporary privilege that lets shareholders purchase additional shares directly from the issuer at a stated price. The price is usually less than the market price of the common shares on the day the rights are issued. The rights are only valid within a given time period.

Risk: The future chance or probability of loss.

Securities: Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.

Settlement: The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security.

Settlement Date: The date when a securities buyer must pay for a purchase or a seller must deliver the securities sold. Settlement must be made on or before the third business day following the transaction date in most cases.

Settlement Price: The price used to determine the daily net gains or losses in the value of an open futures or options contract.

Share Certificate: A paper certificate that represents the number of shares an investor owns.

Short Selling: The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference.

Special Terms: Orders which must trade under special conditions. For example, a cash order will be settled sooner than the usual three-day settlement period.

Special Trading Session: A session during which trading in a listed security is limited to the execution of transactions at a single price.

Speculator: Someone prepared to accept calculated risks in the marketplace for attractive potential returns.

Split Shares: Capital and preferred shares issued by a split-share corporation. A split-share corporation holds common shares of one or more companies. The corporation then issues two classes of shares - capital shares and preferred shares. The objective is to generate fixed, cumulative, preferential dividends for the holders of preferred shares and to enable the holders of the capital shares to participate in any capital appreciation (or depreciation) in the underlying common shares.

Spread: The difference between the bid and the ask prices of a stock.

Standing Committees: Committees formed for the purpose of assisting in decision-making on an ongoing basis.

Stock Dividend/Distribution: A dividend/distribution paid in securities of the same issue or a different issue of the same issuer or another issuer. A stock dividend/distribution can be used as a means to list a new issuer. The issuer or its representative provides the amount, payable date, and record date. The exchange that the issue is listed on sets the ex-dividend/distribution (ex-d) date for entitlement.

Stock Index Futures: Futures contracts which have a stock index as the underlying interest.

Stock Split: A corporate action that increases the number of securities issued and outstanding, without the issuer receiving any consideration for the issue. Approval by security holders is required in many jurisdictions. Each security holder gets more securities, in direct proportion to the amount of securities they own on the record date; thus, their percentage ownership of the issuer does not change. For example, a two-for-one stock split involves the issuance of two new securities for every old security.

Strike Price: The price the owner of an option can purchase or sell the underlying security. The purchases and sales are also known as calls and puts.

Suspended Issue: The status of a listed security of an issuer whose trading privileges have been revoked by the Exchange. All securities of the issuer remain suspended until trading privileges have been reinstated, or the issuer is delisted.

Suspended Issuer: An issuer whose trading privileges for a listed security or securities have been revoked by Toronto Stock Exchange or TSX Venture Exchange. The listed issuer remains suspended until trading privileges have been reinstated, or the listed issuer is delisted.

Tick: Slang used for minimum spread.

Time Value: The difference between an option's premium and its intrinsic value.

Total Number of Shares: The total number of issued and outstanding shares for the security.

Trading Halt: A trading halt is imposed by the exchange, usually due to the dissemination of news that might impact a stock's price.

Trading Issue: The status of a listed security of an issuer whose trading privileges are active on the Exchange.

Transaction Date: The date when the purchase or sale of a security takes place.

Transactions: As reported in exchange trading statistics, represents the total number of trades for a specified period.

Transfer Agent: A trust company appointed by a listed company to keep a record of the names, addresses and number of shares held by its shareholders. Frequently, the transfer agent also distributes dividend cheques to the company's shareholders.

Transferable Security: A security that can be transferred from one party holder to another without restrictions, provided that all proper documentation is included.

Underlying Interest: The specific security, commodity, index or financial instrument that an option or futures contract is traded.

Underwriting: The purchase for resale of a new issue of securities by an investment dealer or group of dealers who are also known as underwriters. The formal agreements for these transactions are called underwriting agreements.

Unlisted: A security not listed on a stock exchange, but traded on the over-the-counter market.

Uptick: A stock is said to be on an uptick when the last trade occurred at a higher price than the one before it.

Venture Capital: Money raised by companies to finance new ventures.

Volatility: A statistical measure of changes in price over a period of time.

Warrant: A security giving the holder the right to purchase securities at a stipulated price within a specified time limit. Exercise of the warrant is solely at the discretion of the holder. Warrants are not exercisable after the expiry date. A warrant is often issued in conjunction with another security as part of a financing. A warrant may be traded as a listed security or it may be held privately.

Writer: The seller of an option. The writer has an obligation associated with the contract to either purchase or sell a specified number of shares at the strike price on or before expiry.

Yield: This is the measure of the return on an investment and is shown as a percentage. A stock yield is calculated by dividing the annual dividend by the stock's current market price. For example, a stock selling at $50 and with an annual dividend of Rs. 5 per share yields 10%. A bond yield is a more complicated calculation, involving annual interest payments, plus amortizing the difference between its current market price and par value over the life of the bond.



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