Treasury and Capital Markets

Treasury and Capital Markets
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Glossary
S.
Term Definition
No.
If the principal is repaid in installments
over time, the principal is said to be
amortized. An annuity deposit, or a loan
1 Amortizing
that is repaid in equal installments over
time are examples of amortizing credit
extension products.
A package consisting of a price
2 Bearing Bond insurance product and a credit extension
product.
The term bullet refers to how the credit
extension product pays back the
3 Bullet principal. If the principal pays back in
one installment, at maturity, the
repayment is said to be bullet.
Price insurance products that give the
4 Call Options owner the right to buy the underlying at
a pre-determined price in the future.
It’s a security which will become an
5 Contingent Security asset or liability only if an event takes
place.
The holder has the right to convert the
6 Convertible Bond bond into equity shares of the issuer at a
fixed conversion price.
A security whose price is dependent
upon or derived from one or more
underlying assets. The derivative itself is
merely a contract between two or more
parties. Its value is determined by
7 Derivatives
fluctuations in the underlying asset. The
most common underlying assets
include stocks,
bonds, commodities, currencies, interest
rates and market indexes.
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A company under financial distress can

incur costs related to the situation, such
as more expensive financing,
opportunity costs of projects and less
8 Financial Distress productive employees. The firm's cost
of borrowing additional capital will
usually increase, making it more difficult
and expensive to raise the much needed
funds.
A bond, loan or deposit that provides a
9 Fixed Rate
return at a fixed interest rate.
A bond, loan or deposit that provides a
10 Floating Rate
return at a floating interest rate.
In finance hedge is a position
established in one market in an attempt
to offset exposure to price fluctuations in
11 Hedge
some opposite position in another
market with the goal of minimizing one's
exposure to unwanted risk.
Situation where the market price is
favorable as compared to the contract
12 In The Money
price. If the value of the price fixing
product is positive for the holder.
If the value of the price fixing product is
13 Out Of Money negative for the holder, it is called out of
money.
Price insurance products that give the
14 Put Options owner the right to sell the underlying at
a pre-determined price in the future.
This is the day count convention used for
INR Central Government Securities. The
15 30 by 360
numerator assumes that every month
has 30 days including February.
Accrued interest is the interest amount
16 Accured Interest accrued from the last coupon payment
to the settlement date.
17 Act by 360
U.S money market instruments.
18 Act by 365 INR deposits and money market
instruments.
Act/Act convention is used in the US

19 Act by Act
Treasury bond market.
There are various ways of representing
yield in the bond markets. As bonds
have no standardization of cash flows
(some bonds have semi-annual coupon
20 Annualized Yield
and some, annual), we must learn the
process of annualizing yields. That is,
representing the yield on a per annum
basis.
An auction is a process of buying and
selling goods or services by offering
21 Auction process
them up for bid, taking bids, and then
selling the item to the highest bidder.
They are bonds which are most traded
22 Benchmark Bonds
and thus have the highest liquidity
It is a bond which has a feature by
which, the company can buy back the
23 Callable Bonds
bond from the investor, anytime after 3
years, and return the money.
A callable bond is to the benefit of the
issuer and will tend to carry a higher
coupon than normal bonds, to
compensate the investor. The reverse is
24 Callable or Puttable Bonds true for puttable bonds. However, in the
market, bonds are typically issued with a
put-call option on pre-set dates. So both
the issuer and the investor have the
flexibility.
25 Certificate of Deposit (CDs) CDs are issued by banks to raise funds.
The clean price is the price of a bond
excluding any interest that has accrued
26 Clean Price
since issue or the most recent coupon
payment
Commercial Paper (CP) is an unsecured
27 Commercial Paper (CPs) money market instrument issued by
corporates to raise money.
These are bonds that can be exchanged

for specified amounts of common stock,
after a certain period of time. So, the
28 Convertible Bonds convertible part of the name refers to
convertible to equity. The conversion
ratio and price are defined in the initial
contract terms, at issuance.
Convexity is that change in the bond
price not explained by duration. In bond
29 Convexity
jargon, it is termed the convexity
adjustment.
Corporate Bonds are issued by public
sector undertakings and private
corporations for a wide range of tenors
30 Corporate Bonds but normally upto 15 years. However,
some Banks and Companies like
Reliance have also issued Perpetual
Bonds.
Coupon is the interest rate the issuer
contracts to pay, in the primary market.
31 Coupon That is, when the bond was first issued.
This remains the same over the life of
the bond.
An assessment of the credit worthiness
of individuals and corporations. It is
32 Credit Rating based upon the history of borrowing and
repayment, as well as the availability of
assets and extent of liabilities.
Annual income (interest or dividends)
divided by the current price of the
security. This measure looks at the
current price of a bond instead of its
33 Current Yield
face value and represents the return an
investor would expect if he or
she purchased the bond and held it for a
year.
A convention about interest rates that
makes life difficult for a newcomer (and
34 Day Count Conventions
many old-timers as well), is the Day
Count convention.
Any debt instrument that can be bought

or sold between two parties and has
basic terms defined, such as notional
amount (amount borrowed), interest
35 Debt securities rate and maturity by renewal date. Debt
securities include government bonds,
corporate bonds, CDs, municipal bonds,
preferred stock, collateralized securities
and zero-coupon securities.
The dirty price of a bond represents the
value of a bond, exclusive of any
36 Dirty Price
commissions or fees. The dirty price is
also called the full price.
The auctioneer begins with a high asking
price which is lowered until some
participant is willing to accept the
37 Dutch Auction
auctioneer's price. The winning
participant pays the last announced
price.
It is an agency called FIMMDA (Fixed
Income and Money Markets Dealers
Association), that gives you the closing
38 FIMMDA
yield curve on a daily basis, as well as
the prices for all the liquid benchmark
bonds.
The fiscal deficit simply put, is the
39 Fiscal deficit difference between the Earnings and
Expenses of the Government.
A flat yield curve is a curve where
40 Flat Yield Curve interest rates are the same across
maturities.
This is a variable rate based on a market
41 Floating Coupon
benchmark similar to LIBOR.
In a French auction, all the successful
42 French Auction
bidders get it at their respective bids.
Central government securities, as the
name suggests, are issued by the central
government of a country, to fund their
43 G-secs
fiscal deficit. They are all very safe
investments as they are backed by the
central government.
44 Kink The difference in the yield

45 Level Coupon This is a fixed interest rate on the bond.
LIBOR stands for London Inter - Bank
Offer Rate. LIBOR is calculated every
working day in London. A poll is
conducted by the British Banker's
46 LIBOR Association (BBA). Around 11 a.m.
London time, 16 banks are asked what,
in their view, are the offered rates at
which deposits are quoted to prime
banks in the London inter-bank market.
comparatively higher yield is offered
47 Liquidity Premium
because of lesser liquidity.
Duration is, the weighted average term
48 Macaulay Duration
to maturity of a bond’s cash flows.
Money market securities are also bonds,
49 Money Market Instruments but with short tenor, i.e. less than 1
year.
Negotiated Dealing System (NDS) is an
electronic platform for facilitating dealing
in Government Securities and Money
50 NDS Market Instruments. NDS facilitates
electronic submission of bids/application
by members for primary issuance of
Government Securities.
A negative yield curve is a curve where
interest rate for shorter maturities are
51 Negative Yield Curve
higher than the rates for longer
maturities.
Non Convertible Debentures are those
that cannot be converted into equity
Non-Convertible Debentures
52 shares of the issuing company, as
(NCDs)
opposed to convertible debentures,
which can be.
A positive yield curve is a curve where
interest rate for shorter maturities are
53 Positive Yield Curve
lower than the rates for longer
maturities.
The current worth of a future sum of

money given a specified rate of return.
Future cash flows are discounted at the
54 Present Value of Money
discount rate, and the higher the
discount rate, the lower the present
value of the future cash flows.
It is a bond where the investor has the
55 Puttable Bonds right to sell the bond back to the issuer
prior to maturity.
PVBP as it is commonly known, is the
Price Value of a Basis Point. It is also
56 PVBP/PV01/DV01 called PV01 (price value of 1 bp) or
DV01 (dollar value of 1 bp) in certain
banks.
An instrument or transaction common in
the money markets are called ready
57 Repurchase Agreements (Repos)
forward transactions or Repos. Repo
comes from Repurchase Agreement.
58 Riding the curve trading on shape of the yield curve
For the G-secs, like for equities, you
need to have a demat equivalent
account. This is called a SGL (Subsidiary
General Ledger) account, and is
59 SGL
maintained with the RBI. This account
provides for holding of Central/State
Government Securities and Treasury
bills in book entry/dematerialized form.
The yield spread is the difference
between the quoted rates of return on
60 Spread
two different investments, usually of
different credit quality.
State Governments also need to raise
money for building infrastructure, etc.
Although the majority of state funding
61 State Government Securities comes through borrowings from the
Central Government, a significant
amount of borrowing is also done by the
state through capital markets.
The Employees' Provident Fund

Organisation (EPFO) of India is a state
sponsored compulsory contributory
pension and insurance scheme. It is one
62 State Provident Fuds
of the largest social security
organisations in the world in terms of
members and volume of financial
transactions undertaken
T-Bills are short term (up to one year)
borrowing instruments of the
Government of India which enable
63 T-Bills
investors to park their short term
surplus funds while reducing their
market risk.
The act of gaining agreement of the
64 Trade Agreement
trade details with the counterparty.
involves the selection, calculation, and
attachment to a trade, of any other
65 Trade Enrichment
information necessary for trade
completion and settlement.
The Government of India also issues
securities called Treasury Bills or just T-
Bills, that have a maturity more than 1
66 Treasury Bills
year. They are also called money
market securities as they are of short
duration.
It is the ratio of number of days between
67 Year Fraction two dates and the number of days in a
year
In finance, the term yield describes the
amount in cash that returns to the
owners of a security. Normally it does
not include the price variations, at the
difference of the total return. Yield
68 Yield applies to various stated rates of return
on stocks (common and preferred, and
convertible), fixed income instruments
(bonds, notes, bills, strips, zero coupon),
and some other investment type
insurance products (e.g. annuities).
A yield curve gives the relationship

69 Yield Curve between interest rate and term to
maturity, at a specified time.
The rate of return anticipated on a bond
if it is held until the maturity date. YTM
70 Yield To Maturity (YTM)
is considered a long-term bond yield
expressed as an annual rate.
This is a bond where there are no
intermediate coupons. The bond is
71 Zero Coupon
issued at a discount to the face value
and the face value is paid on maturity.
The price of a zero coupon bond is pretty
simple, as we need to discount only one
72 Zero Coupon Bond Pricing
cash flow - the face value - from
maturity date to the present.
American Depository Receipt (ADR) is a
negotiable certificate issued by an
American bank. It represents a certain
73 ADR number of shares of a foreign company,
which have been deposited with them.
For example, an Infosys ADR traded in
the NYSE represents two Infosys shares.
This involves creating various scenarios
74 Analytics or Simulation and applying them on their portfolio to
study the possible impact.
Bellwether literally means a sheep that
leads the herd, often bearing a bell,
75 Bellwether Stock
hence a share which assumes a position
of market leadership.
Beta is a measure of systematic risk. It
compares the sensitivity of value of a
76 Beta
security with the movements in the
market index.
The value at which an asset is carried on
a balance sheet. Since the asset is
77 Book Value
subject to depreciation, the book value
is lower every year.
A financial measure that represents a
78 Book Value per Share per share assessment of the minimum
value of the equities of a company.
This involves looking for individual

shares with outstanding performance or
potential, without considering economic
trends. This approach works on the
79 Bottom-up Approach
assumption that individual companies
can still do well, though the industry to
which they belong may not be doing
well.
A price movement through an identified
level of support or resistance, which is
usually followed by heavy volume and
80 Breakout Pattern increased volatility. Traders will buy the
underlying asset when the price breaks
above a level of resistance and sell when
it breaks below support.
Bull market refers to a market that is on
the rise. There is a sustained increase in
market share prices. Investor confidence
and expectations are high in a bull
81 Bull and Bear Markets
market. Bear market is a steady drop in
stock prices over a period of time.
Investor confidence drops, leading to a
further drop in market prices.
Stock markets are very volatile. Its
volatility is generally a cause of concern
for both policy makers as well as
82 Circuit Breakers
investors. To curb excessive volatility,
SEBI has prescribed a system of circuit
breakers.
A clearing firm is an organization that

works with the exchanges to handle
83 Clearing Firms
confirmation, delivery and settlement of
transactions
The settlement of securities transactions

among brokers and dealers in which all
transactions are netted out by the
National Securities Clearing Corporation
Continuous Net Settlement
84 in order to minimize the movement of
(CNS)
physical certificates and money
balances. With continuous net
settlement, only net settlement balances
need be moved.
These are stocks that go against market
perception. The traders who recognize
85 Contrarian Stocks
such stocks will sell past winners and
buy past losers.
These are instruments that convert into
equity shares at the option of the
86 Convertibles
investor. The original instrument is
typically a bond.
A custodian is legally responsible for
ensuring that an item or person is safe
and secure. In investment terms, a
87 Custodian custodian is the financial services
company that maintains electronic
records of financial assets or has
physical possession of specific securities.
These are banks where the clients hold
their demat accounts. They facilitate
88 Custodian Banks clearing and settlement for the client, by
interacting with the broker members,
depositories and clearing corporations.
These are stocks that move in tandem
with the economy. For example, basic
industries such as cement, steel,
automobiles etc. are cyclical in nature.
89 Cyclical Stocks When the global economy is in
recession, consumers spend less money,
so the demand for such products drops,
as also the demand for stocks of
companies in the mentioned sectors.
These are stocks that are relatively

protected from economic cycles. For
example, stocks of pharmaceutical
90 Defensive Stocks
companies or stocks of Fast Moving
Consumer Goods (FMCG) companies -
such as Hindustan Unilever Ltd (HUL).
Most securities are held in electronic
(also called dematerialized) form in the
demat (short for dematerialized)
91 Demat accounts at firms providing depository
services. That is, the demat account is a
record of securities held, just like a bank
balance is a record of cash held.
Investors do not hold the physical shares
that need to be exchanged when an
order is executed. Most securities are
held in electronic (also called
dematerialized) form in the demat (short
92 Depository
for dematerialized) accounts at firms
providing depository services. That is,
the demat account is a record of
securities held, just like a bank balance
is a record of cash held.
These are certificates issued by an
overseas depository bank against certain
93 Depository Receipts
underlying stock or shares of an Indian
company.
An order with a Disclosed Quantity (DQ)
94 Disclosure Quantity allows the user to disclose only a portion
of the order quantity to the market.
A financial ratio that shows how much a
company pays out in dividends each
year relative to its share price. In the
95 Dividend Yield
absence of any capital gains, the
dividend yield is the return on
investment for a stock.
In Deferred Net Settlement, a
transaction done after the designated
96 Deffered Net Settlement (DNS)
time has to wait till the next designated
time of settlement.
A double top is a reversal chart pattern

which is defined by a chart where a
financial instrument makes a run up to a
97 Double Top particular level, then drops back from
that level, then makes a second run at
that level, and then finally drops back off
again.
The portion of a profit allocated to each
outstanding share of common stock of a
98 Earnings Per Share (EPS) company. Earnings per share serves as
an indicator of profitability of a
company.
The exchange facilitates trade execution
and the clearing and settlement of
99 Exchange
securities through their various agencies
such as clearing firms.
The nominal or stated amount (in rupees
in India) assigned to a security by the
100 Face Value
issuer. Also known as par value or
simply par.
Foreign Currency Convertible FCCB are debt instrument issued in
101
Bond (FCCB) foreign currency.
Foreign Institutional Investors (FIIs) are
used to denote investors - typically
an institution. They invest money in
Foreign Institutional Investors
102 financial markets across the globe,
(FIIs)
different from the one where they are
originally incorporated. For example,
Morgan Stanley Hongkong.
When the total expenditures exceed the
revenue that it generates (excluding
money from borrowings), it is called
103 Fiscal Deficit
fiscal deficit. Deficit differs from debt,
which is an accumulation of yearly
deficits.
A forward contract is an agreement
between two parties to buy or sell an
104 Forward Contract
asset at a certain future time for a
certain price agreed today.
When company who already has its

shares in the public come up with
105 Follow-on Public Offer
another issue. The issue is called Follow-
on Public Offering
Free float of a company is an estimate of
106 Free Float the proportion of shares that are freely
traded in the market.
This involves analysing the fundamentals
107 Fundamental Analysis
of the company in question.
This is the sum total of all products and
108 Gross Domestic Product (GDP)
services produced by the country.
A negotiable certificate that shows
ownership of a company shares. GDRs
let companies offer shares in markets
throughout the world, and they let
investors purchase an equity stake in
foreign companies without having to use
the home exchange of the company.
Global Depository Receipt or
109 That saves the investor the time,
GDR
difficulty, and cost of trading shares on a
foreign exchange. GDRs convert
dividends and share price into the home
currency of the investor. A GDR is
similar to an ADR, which represents
ownership of foreign companies that
trade on U.S. exchanges.
These are stocks that are expected to
110 Growth Stocks demonstrate price growth which is better
than the market.
In technical analysis, a pattern that
results where a stock price reaches a
peak and declines; rises above its
former peak and again declines; and
111 Head and Shoulders
rises a third time but not to the second
peak, and then again declines. The first
and third peaks are shoulders, while the
second peak is the formations head
A high net worth individual is a person
High Net-worth Individuals with large financial holdings (usually
112
(HNIs) financial assets worth more than US$1
million).
Shows the trend across time. Growth of

each component of the Profit and Loss
113 Horizontal Analysis account or the Balance sheet over a
period (say, 5 years) is shown and
analysed.
These are stocks that provide a good
dividend yield on the amount invested.
114 Income Stocks These companies have a stable flow of
revenue that allows consistent income
(payout) to investors.
Index of Industrial Production (IIP) is
index which details out the growth of
various sectors in an economy. Index of
Industrial Production (IIP) is an abstract
Index of Industrial Production
115 number, the magnitude of which
(IIP)
represents the status of production in
the industrial sector for a given period of
time as compared to a reference period
of time.
Inflation is a rise in the general level of
116 Inflation prices of goods and services in an
economy over a period of time.
The percentage of the purchase price of
securities (that can be purchased on
117 Initial Margin margin) that the investor must pay for
with his or her own cash or marginable
securities.
A person bases their trade of stocks in a
public company on information that the
public does not know. It is illegal to
118 Insider Trading
trade your own stock in a company
based on this information and it is also
illegal to give someone that information.
The intrinsic value of a share, as against
its market driven prices, is its
fundamental strength and future
119 Intrinsic Value potential. This is measured by data like
sales, operating profit, book value, debt
structure, market share, etc. also called
fair value.
When company issues its shares for the

120 Initial Public Offering (IPO) first time it is called Initial Public
Offering
A limit order sets a certain price at which
the order will be executed within the
121 Limit Order trading day and is executed at the set
price or better. It will not be executed if
that price is not met.
The assets of the company are sold off
and the liabilities and shareholder
122 Liquidation obligations are paid out of the proceeds.
This is when a company becomes
insolvent.
These are markets where there is a
physical forum like an exchange where
123 Listed Markets
buyers and sellers come together to
transact.
Loss limits describes the maximum loss
124 Loss Limit
a trader can incur on a single day.
A brokers demand on an investor using
margin to deposit additional money or
securities so that the margin account is
brought up to the minimum maintenance
125 Margin Call
margin. Margin calls occur when a
account value depresses to a value
calculated by a particular formula by the
broker.
The amount that an investor must
126 Margin Requirement deposit in a margin account before
buying on margin or selling short.
Practice of buying stock with money
borrowed from the broker. In this
arrangement, the investor makes a cash
127 Margin Trading
down payment (called the margin) with
the broker and can purchase stocks
worth about twice the cash amount
Profit or Loss is calculated at the end of
128 Mark to Market (MTM) the day on all open positions. This is
called Mark to Market (MTM)
The total market value, at the current

stock exchange list price, of the total
129 Market Capitalization
number of equity shares issued by a
company.
Market orders are executed at once, at
the market. A market order guarantees
130 Market Order execution, but does not guarantee a
price. The final price is determined by
supply and demand.
The merchant bank acts as the facilitator
to the issue for corporations, by
131 Merchant Bank
advising, pricing and processing and
distributing the issue.
Merger is a combination of two
132 Merger
companies into one larger company.
These are stocks that move in tandem
with the relevant benchmark index, that
133 Momentum Stocks is they have a strong correlation with
the index. If the index moves up, these
will move up as well.
134 Monetary Assets Cash and Liquid securities
Money laundering is the criminal practice
135 Money Laundering of disguising ill-gotten gains, or dirty
money, through a series of transactions.
Net position is the difference between
136 Net Position total open buy and open sell positions in
a given security held by an individual.
For a company, total assets minus total
liabilities. Net worth is an important
determinant of the value of a company,
considering it is composed primarily of
137 Net Worth
all the money that has been invested
since its inception, as well as the
retained earnings for the duration of its
operation.
A performance metric that examines

how successful a firm s
investment decisions are compared to its
debt situations. A negative value
138 NIM
denotes that the firm did not make an
optimal decision, because interest
expenses were greater than the amount
of returns generated by investments.
A classification used by financial
institutions that refer to loans that are in
virtue of default. Once the borrower has
139 Non Performing Assets failed to make interest or principal
payments for 90 days the loan is
considered to be a non-performing
asset.
An option is a contract between a buyer
and a seller that gives the buyer the
140 Options right - but not the obligation - to buy or
to sell a particular asset at a later day at
an agreed price.
This refers to a stock market situation,
in which too much money is chasing too
few shares, leading to sharp price rises,
and frequent gaps. Thus the price is
141 Overheated Market
being driven not by a rise in the
fundamental or intrinsic value of the
company but by a demand-supply
mismatch.
A negotiated market without a physical
location where transactions are done via
142 Over-the-counter Market
telecommunications. For example,
currency markets.
Stocks with value greater than its
143 Overvalued
intrinsic value.
A ratio used to compare market value to
its book value of a stock. It is calculated
144 Price to Book Value Ratio by dividing the current closing price of
the stock by the latest quarter's book
value per share.
Participatory Notes (P-Notes or PNs) are

instruments issued by registered Foreign
Institutional Investors (FIIs) to overseas
investors. This is issued to those, who
Participatory Notes (P-Notes or
145 wish to invest in the Indian stock
PNs)
markets without registering themselves
with the market regulator - SEBI
(Securities and Exchange Board of
India).
An agent who accepts payments from
the issuer of a security and then
146 Paying Agent distributes the payments to the holders
of the security. Also known as a
disbursing agent.
Position limits is the maximum net open
position a trader can have in his equities
147 Position Limit portfolio. This could be a limit on an
individual stock or on the portfolio as a
whole.
A valuation ratio of a current share price
148 Price Earnings Ratio of the company compared to its per-
share earnings.
Primary market is the market where a
financial instrument is first issued or
149 Primary Market
offered to the public. The interaction is
between the issuer and the investor.
Market Price protection functionality
gives an option to a trader to limit the
150 Protection risk of a market order, within a pre-set
percentage of the Last Traded Price
(LTP).
This category of investors for the
purpose of allotment of shares includes -
151 Qualified Institutional Buyers a public financial institution, commercial
bank and other institutions like provident
funds, pension funds etc.
Resistance level is the opposite of a

support level. It is where the price tends
to find resistance as it is going up. This
means the price is more likely to bounce
off this level rather than break through
152 Resistance Level
it. However, once the price has passed
this level, by an amount exceeding some
noise, it is likely that it will continue
rising until it finds another resistance
level.
Retail investor means an investor who
153 Retail Investors applies or bids for securities for a value
of not more than Rs.1,00,000.
When the company issues its shares to
154 Rights issue existing share holders only it is called
rights issue.
It stands for Real Time Gross
Settlement. RTGS system is a funds
transfer mechanism where transfer of
money takes place from one bank to
155 RTGS
another on a real time and on gross
basis. This is the fastest possible money
transfer system through the banking
channel.
SEBI, or the Securities Exchange Board
156 SEBI of India, regulates stock markets in
India.
Where existing financial instruments are
157 Secondary Market
traded.
Short sale is when you sell something
158 Short Sale
that you do not own.
This refers to the squeeze on short
sellers to cover their position when the
markets rise sharply. To avoid bigger
159 Short Squeeze
losses, short sellers have to buy stocks
at a loss, but their buying pushes up the
prices further.
Money invested by people with a more
informed knowledge of the markets is
160 Smart Money
known as smart money. It applies to
institutions mainly, and not individuals.
This is an event where a portion of a

161 Spin Off company is broken off and established
as a separate legal entity.
This facility allows the trader to input an
order when the market price of the
162 Stop-loss Order security reaches, or crosses, a threshold
price called the trigger price or stop loss
order price.
New industries which are coming up, and
growth areas which are going to play an
163 Sunrise Industries
important role in the economy of the
country are called sunrise industries.
A support level is a price level where the
price tends to find support as it is going
down. This means the price is more
likely to bounce off this level rather than
164 Support Level break through it. However, once the
price has passed this level, by an
amount exceeding some noise, it is likely
to continue dropping until it finds
another support level.
These are technology service providers
who automate the various processes and
165 System Vendors
ensure processing with minimal manual
intervention.
Tangible assets are assets that can be
166 Tangible Assets physically seen and verified like land,
building, machinery etc.
Technical Analysis is a method of
prediction of share price movements
167 Technical Analysis
based on a study of price graphs or
charts.
This is an open offer to buy shares of a
168 Tender Offer
company.
This is basically a fundamental approach
to investing. In this approach, an
investor considers important parameters
169 Top-down Investing like trends in the economy, industries
which these trends favor and companies
within these industries which are likely
to benefit the most.
A bank or similar financial institution

170 Transfer Agent assigned to maintain records of investors
and account balances and transactions.
A straight line drawn to connect the
171 Trendlines highest or lowest prices of a share over
a period in the immediate past.
Stocks with value less than its intrinsic
172 Undervalued
value.
Underwriters are entities that bear the
risk of under subscription in any issue.
173 Underwriters This means that in case the issue is
undersubscribed, the underwriters would
take the balance amount.
Valuation of a company seeks to attach
a quantifiable value to the company and
174 Valuation of a company can be done using various methods like
discounted cash flows, realizable value,
enterprise value etc.
VaR is a technique used to estimate the
175 Value at Risk maximum probable loss of value of an
asset.
A VaR Margin is a margin intended to
cover this maximum probable loss that
176 Value at Risk Margin
may be faced by an investor on a single
day with a 99 percent confidence level.
These are stocks whose current
valuation does not reflect some valuable
aspects of the company. It requires an
expert to spot such stocks. Such stocks
177 Value Stocks are likely to trade at a lower price
compared to their fundamentals (that is,
dividends, earnings, sales, etc.) and
hence are considered as undervalued by
investors.
It is used to compare companies of
different sizes. All components of the
Profit and Loss are expressed as a
178 Vertical Analysis
percentage of sales and all components
of the Balance sheet are expressed as a
percentage of the total.
Volatility most frequently refers to the

standard deviation of the continuously
compounded returns of a financial
179 Volatility
instrument with a specific time horizon.
It is often used to quantify the risk of
the instrument over that time period.
180 Asker The party which ask the price.
181 Base Currency Currency being priced.
Bid price is the price at which the quoter
182 Bid Price
is ready to buy quoted currency.
The Big Mac theory (purchasing-power
parity, or PPP) says that exchange rates
183 Big Mac Theory
should even out the prices of Big Macs
sold across the world.
184 CABL Or CBL GBP or USD
In case of carry trade investors borrow
low-yielding and lend high-yielding
currencies. It tends to correlate with
185 Carry Trade
global financial and exchange rate
stability, and retracts in use during
global liquidity shortages.
Transaction date is also known as cash
186 Cash Date
date.
187 Check or CHK Check price now
188 Choice or CH Same as bid or offer
CLS Bank, a new financial institution, set
Continuous linked settlement
189 up to reduce the risk involved in settling
(CLS)
foreign exchange transactions.
CMTM shows how much money will be
190 Current Mark to Market (CMTM) lost if the position is unwinded or settled
immediately
Credit Risk is the risk of default by a
191 Credit Risk
counterparty.
Direct quotations use USD as the base
192 Direct Quotations
currency (BC).
193 DTC Diamond Trading Corporation.
The FOMC, a component of the Federal

Reserve System, is charged under
United States law with overseeing the
The Federal Open Market nations open market operations. It is the
194
Committee (FOMC) Federal Reserve Committee that makes
key decisions about interest rates and
the growth of the United States money
supply.
195 Far Date The second date is called the far date
Dates beyond spot date like one week
196 Forward Date
from spot or one month from spot.
A contract to buy or sell an asset at a
197 Future certain time in the future for a certain
price.
These are limits imposed on every
198 Gap Limit forward tenor in which you hold a
position.
Hedge is a position established in one
market in an attempt to offset exposure
to price fluctuations in some opposite
199 Hedge
position in another market with the goal
of minimizing ones exposure to
unwanted risk.
This is normally the price elasticity of
demand for imports of a country, either
for a single industry or for the aggregate
200 Import Elasticity of all imports. Price elasticity measures
the change in demand for a product with
respect to the change in the price of that
product.
Indirect quotations use USD as the
201 Indirect Quotations
quoting currency (QC).
They do not have USD as the base
202 Indirect Quote
currency
Interpolation is a method of constructing
203 Interpolation new data points within the range of a
discrete set of known data points.
An indicator of the economic health of

the manufacturing sector. The PMI index
is based on five major indicators - new
204 ISM -PMI
orders, inventory levels, production,
supplier deliveries and the employment
environment.
Indicative market rate, not a live price
205 Level or LVL
for trading.
These relate to the loss that you can
incur in a specific period i.e. a single
206 Loss Limits
day, a month etc. We called it
Management Action Trigger (MAT).
Banks charge margins for all customer
207 Margins transactions to recover their cost and
make some profit.
208 MIO Million
It means - how much more can I lose in
Maximum Likely Increase in
209 case the counterparty defaults anytime
Value (MLIV)
later, prior to maturity.
The first date in swaps is called the near
210 Near Date
date.
211 Nostro Account This means our account with them.
Price at which the quoter is ready to sell
212 Offer Price
quoted currency.
This denotes the size of your position in
213 Position Limit each currency pair whether long or
short.
Pre-settlement Risk (PSR) is the risk
that a counter party may default on a
214 Pre-Settlement Risk
contractual obligation before the actual
settlement date of the contract.
215 Quoted Currency Currency used to express the price.
The party which quotes the price for a
216 Quoter
currency.
Currencies which are stable in nature in
217 Safe Heaven Currencies
uncertain times.
Settlement Risk is the risk that a counter
218 Settlement Risk (SR)
party may default on settlement date.
219 Small Around USD 0.25 mio
Two business date from the date of

220 Spot Date
transaction is known as spot date.
Stop Loss is the level at which you wish
221 Stop Loss
your losses to be protected or stopped.
Society for Worldwide Interbank
222 Swift
Financial Telecommunications.
223 Tiny Around USD 0.1 mio
The date after the cash date is known as
transaction date and transaction that
224 Tom Date
settles next business day is known as
tom transactions.
The date on which the transaction takes
225 Transaction Date
place.
226 Value or Val Value or settlement date.
227 Yard Billion (bio).

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A QUALITY E-LEARNING PROGRAM BY WWW.LEARNWITHFLIP.COM

A company under financial distress can

Act/Act convention is used in the US

These are bonds that can be exchanged

Any debt instrument that can be bought

44 Kink The difference in the yield

The current worth of a future sum of

The Employees' Provident Fund

A yield curve gives the relationship

This involves looking for individual

A clearing firm is an organization that

The settlement of securities transactions

These are stocks that are relatively

A double top is a reversal chart pattern

When company who already has its

Shows the trend across time. Growth of

When company issues its shares for the

The total market value, at the current

A performance metric that examines

Participatory Notes (P-Notes or PNs) are

Resistance level is the opposite of a

This is an event where a portion of a

A bank or similar financial institution

Volatility most frequently refers to the

The FOMC, a component of the Federal

An indicator of the economic health of

Two business date from the date of

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