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Date set by-companywhichinvestor must own shares to be eligible for dividend share split bonus rights issue or other capital gains as declared announced bycompany It isdate established bycompany for determiningshareholders whoentitled to receive dividend bonus or rights sharesthe company In this case it is also important to know whatex-date is Ex-date isdatewhichsellernotbuyera stock will be entitled to-recently announced dividend bonus or other corporate action The ex-date is usually-business day prior torecord date since T+2 trading cycle is followed for clearingsettlementtrades"India Example If record date for dividend is set by-company as 4th March then those investors whose names appearthe shareholder list4th March as received bycompany formdepository will be entitled todividend Doing-back-calculation forinvestors name to feature"the 4th March shareholder list he should be holdingshares two days prior to that date ie2nd March (due to T+2 cycle) Thus those shareholders holding shares at endday 2nd March will be entitled todividend The ex-date"this case will be 3rd March-datewhichbuyer will not be entitled todividend declared Source sptulsiancom

ASBA stands for Application Supported by Blocked Amount The facility was introduced by SEBI"July 2008 to help retail investors apply"IPOs FPOsrights issuecompanies"ease Earlier while makingapplication"an IPOinvestor had to pay full application money attimesubmissionthe application form In ASBA one can makeapplication for shares without actually parting"the money immediately The amount for application money is only blocked"the accountthe applicant The money is debited frombank account only whenbasisallotment is finalisedalso only for numbershares thatfinally allotted toinvestor Money blocked under ASBA is unblocked fully or partly aswhensharesallotted orissue is withdrawn Thus ASBA eliminates problems associated"delay or non-receiptrefunds Moreover banks continue to give interestaccount as alsomoney blocked"the account is considered for calculatingaverage daily quarterly balances Thus investorssavedhasslesrefund deposits while continuing to earn interestthe application money Source sptulsiancom

Repo or repurchase option is-meansshort-term borrowing wherein banks sell approved government securities to RBIget funds"exchange In other words"a repo transaction RBI repurchases government securitiesbanks dependingthe levelmoney supply it decides to maintain"the countrys monetary system Repo rate isdiscount rate atbanks borrowRBI Reduction"repo rate will help banks to get money at-cheaper rate while increase"repo rate will make bank borrowingsRBI more expensive If RBI wants to make it more expensive forbanks to borrow money it increasesrepo rate Similarly if it wants to make it cheaper for banks to borrow money it reducesrepo rate Reverse repo isexact oppositerepo In-reverse repo transaction banks purchase government securities form RBIlend money tobanking regulator thus earning interest Reverse repo rate israte atRBI borrows moneybanks Banksalways happy to lend money to RBI since their money is"safe hands"a good interest Thus repo rate is always higher thanreverse repo rate Source sptulsiancom

Free-float refers to those sharesare readily available for trading"the stock market It generally excludes promoters holding government strategic holdingother locked-in shareswill not come tomarket for trading"the normal course Eg MMTC has Rs 5 crore outstanding shareswhich 497 crore sharesheld byGovernment under promoter category Onlybalance 334 lakh shares comprisefree floatthe company Source sptulsiancom

Stoploss is-buy or sell ordergets triggered automatically oncestock reaches-certain price The aim here is to limitloss on-security (buy or sell) position A stop order to sell becomes-market order whenitem is offered at or belowspecified price Eg If you have bought 1 shareRIL at Rs 1050 you will enter stoploss order at-price below Rs 1050 say Rs 1020 If RIL share price falls to Rs 1020-sell stoploss order will get triggeredlimits your lossaccountpurchase to Rs 30 Similarly-stop order to buy becomes-market order whenitem is bid at or abovespecified price Eg If you have short-sold 1 shareRIL at Rs 1050 you will enter stoploss order at-price above Rs 1050 say Rs 1070 If RIL share price rises to Rs 1070-buy stoploss order will get triggeredwill limit your lossaccountsale to Rs 20 Thereno set rules for stoploss orders Traders deploy very tight stoploss orders while investors may not need it also Advantagestoploss is it avoidsneed for constant monitoringshare price Its disadvantage is that short-term price fluctuations could trigger stoploss orders very frequently Also setting very narrow stoploss for shares historically having wide price fluctuations could lead to unnecessary triggersstoploss Eg If you bought 1 shareRIL at Rs 1050"stoplossRs 1020 This means that ifstock falls below 1020 your stoploss order will automatically become-market ordershare will be sold atthen prevailing market price not necessarilystoploss price Thus setting-stoploss order belowpurchase price will limitloss but"a very fast-moving market losses may be higher than expected Source sptulsiancom

Open Interest istotal numberoutstanding contracts held by market participants atendthe day Alternatively it istotal numberfutures contracts that have not yet been exercised (squared off) or expired Open interest indicatestrend"the FO marketmeasuresflowmoney intofutures market The open interest position representsincrease or decrease"the numbercontracts for-dayit is shown as-positive or negative number CalculationOpen Interest Each trade completedthe exchange hasimpact uponlevelopen interest for that day There-three possibilities - 1One new buyer one new seller (both parties initiating-new position) - open interest will increase by one contract 2One old buyer one old seller (both partiesclosingexistingold position) - open interest will decline by one contract 3One old buyer one new buyer (old trader passing off his position to-new trader) - open interest remains unchanged Increasing open interest means that new money is flowing intomarketplace The result will be continuationpresent trend (up down or sideways) Declining open interest means that market is liquidatingimplies prevailing price trend is coming toend Source sptulsiancom

Put option givesbuyerrightnotobligation to sell-given quantitythe underlying asset at-given priceor before-given future date For eg Buying 1 put optionONGC 1250 30Dec2010 comprising 250 equity shares for Rs 15 per put will givebuyerright to sell 250 ONGC sharesor before 30th December 2010 at Rs 1250 per share irrespectivethe share price (in cash market) Since it is only-rightno obligation to sellbuyer can let this right lapsewill becase when ONGC share price is more than Rs 1250"cash market Inabove case loss is limited to Rs 15 whilegainsunlimited tobuyer Rs 15 paid is termed as option premium orcostpurchasing 1 put option containingpre-determined quantitythe underlying ie 250 ONGC equity shares Selling-put option givessellerobligation to buy-given quantitythe underlying asset at-given priceor before-given future date whenright is exercised bybuyer For-sellerput option profit is limited topremium earned while loss it unlimited asbuyer can exercise his put option anytime tillexpirycontract Source sptulsiancom

Call option givesbuyerrightnotobligation to buy-given quantitythe underlying asset at-given priceor before-given future date For eg Buying 1 call optionONGC 1250 30Dec2010 comprising 250 equity shares for Rs 80 per call will givebuyerright to buy 250 ONGC sharesor before 30th December 2010 at Rs 1250 per share irrespectivethe share price (in cash market) Since it is only-rightno obligation to buybuyer can let this right lapsewill becase when ONGC share price is less than Rs 1250"cash market Inabove case loss is limited to Rs 80 whilegainsunlimited tobuyer Rs 80 paid is termed as option premium orcostpurchasing 1 call option containingpre-determined quantitythe underlying Selling-call option givessellerobligation to sell-given quantitythe underlying asset at-given priceor before-given future date whenright is exercised bybuyer For-sellercall option profit is limited topremium earned while loss it unlimited asbuyer can exercise his call option anytime tillexpirycontract Source sptulsiancom

Debt-equity ratio is-measureleverage indicating proportioncompanys total capital contributed by securedunsecured debt A high debt-equity ratio generally 21above is not considered favourable for companies Also this ratio variesindustry to industry Debt-equity ratio = Secured + Unsecured debt Shareholders Funds Eg As31st March 2010 company had secured loanRs 70 crore unsecured loanRs 30 crore shareholders funds (equityreserves)Rs 200 crore Debt-equity ratio = 70 + 30 200 Debt-equity ratio = 051 Source sptulsiancom

Swap ratio isexchange ratio used"casemergersacquisitions It isratio"whichacquiring company offers its own shares"exchange fortarget companys shares To calculateswap ratio companies analyze financial ratios such as book value earnings per share profits after tax as well as other factors such as sizecompany long-term debts strategic reasons formerger or acquisitionso on For example if company A is acquiring company Boffers-swap ratio15 it will issue one shareits own company (company A) for every 5 sharesthe company B being acquired In other words if company B has 10 crore outstanding equity shares100it is being acquired by company A then company A will issue 2 crore new equity sharescompany A toshareholderscompany B proportionately Source sptulsiancom

Bonus shares means new shares given freecost to allexisting shareholdersthe company"proportion to their holdings For example-company announcing bonus issue15 is issuing one (new) bonus share for every five shares held byshareholdersthe company Rights issues are-proportionate numbershares available to allexisting shareholdersthe companycan be bought at-given price (usually at-discount to current market price) for-fixed periodtime For example-company announcing rights issue23 at Rs 100 per share (current share price Rs 130 per share) is issuing two (new) rights shares for every three shares held byshareholdersthe company at Rs 100 per share The rights shares can also be sold"the open market If not subscribed torights shares lapseclosurethe offer Source sptulsiancom

ISIN stands for International Securities Identification Number (ISIN) It isinternational numbering system setbyInternational Organization for Standardization (ISO) to number specific securities such as stocks (equitypreference shares) bonds optionsfutures ISIN contains 12 characters"totalcompriseboth alphabetsnumbers The first two digits stand forcountry code next nine digits areunique identification number forsecurity whilelast digit is-check digit to prevent errors Eg ISIN for State BankIndia (SBI) is INE062A01012 Source sptulsiancom

Dividend yield is dividend to price ratio It ispercentage calculated by dividing dividend per share by price per share Dividend yield is used to calculateearninginvestment (shares) considering onlyreturns"the formtotal dividends declared bycompany duringyear Dividend Yield = Interim + Final Dividend X 100 Market Pricethe share Eg For-company for FY10 Interim dividend = Rs 2 per share Final dividend = Rs 3 per share Share price = Rs 50 Dividend yield = 2 + 3 50 Dividend yield =10 Source sptulsiancom

Cash EPS takes into accountcash flow generated by-company on-per share basis while EPS looks atnet income generated on-per share basis for-given period Like EPS highercash EPS better it is considered Cash EPS = Operating cash flow forperiod Weighted average numberequity shares outstanding Cash EPS can be computedEPS by adjusting for depreciation amortizationgoodwillother non-cash items such as deferred taxintangibles Source sptulsiancom