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Stock Market Glossary

To give the delivery of shares from one account to another account, the investor has to fill Delivery Instruction Slip (DIS). DIS may be compared to cheque book of a bank account.

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

A security whose price is derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.

Reducing the investment risk by purchasing

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

A means of reinvesting dividends, which would otherwise be paid to the shareholder in cash, in additional stock of the company

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%.

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.

The date set by the issuer on which the dividend/distribution will be paid.

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

An exchange is a place in which different investments are traded. The most well-known in India is NSE & BSE

Face value (FV) or par value of a stock indicates the fixed denomination of a share. The face value is important with regard to corporate action. Usually when dividends or stock split are announced they are issued keeping the face value in perspective. For example the FV of Infosys is 5, and if they announce an annual dividend of Rs 63 then it means the dividend paid is 1260 per cent (63 divided by 5).