Terminology

Investments : An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.(Investopedia)

Required Rate of Return: The minimum return an investor should accept from an investment to compensate him for deferring consumption. Its three components are: Time Value of Money, Expected rate of inflation and the risk involved.

Bear market: a sustained overall decline in share prices in the market

Bull market: a sustained overall appreciation in share prices in the market

 

Blue chip: Denotation for companies whose shares are regarded as a reliable investment

 

Ordinary shares: shares that represent equity ownership in a company and entitle the owner to voting rights on matters put before the shareholders. Ordinary shareholders are entitled to dividends if any are still available after the dividend payout to preference shareholders

 

Preference shares: shares that entitle the owner to a fixed dividend. The dividends paid out to preferences shareholders takes priority over that paid out to ordinary shareholders. Preference shareholders usually do not have any voting rights as opposed to ordinary shareholders.

 

Hedge/Hedging: Deliberate action undertaken to protect oneself against financial loss or other adverse circumstances

Forward Exchange Contract: are agreements between two parties to exchange two designated currencies at a specific time in the future. These contracts always take place on a date after the date that the spot contract settles, and are used to protect the buyer from fluctuations in currency prices.

Repo Rate:  is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.

Basis point: a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01% (0.0001), and is used to denote the percentage change in a financial instrument. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points, and 0.01% = 1 basis point.