Understanding the terms of the stock market can sometimes be difficult for new investors. Nevertheless, familiarising yourself with important terms will enable you to make better choices and navigate the market more proficiently. The following is an easy-to-understand explanation of some of the most important stock market terms any investor should learn.
Annual Report
An annual report is a statement which firms release annually announcing their financial health. It states their earnings, profits, and what the firm wishes to accomplish in the future. An annual report can assist investors in analysing how good a company is performing.
Block Trade
A block trade is a large volume transaction of securities, sometimes dealt privately between two parties. These trades usually occur outside of the open market so as not to influence stock prices.
Date of Delivery
The date of delivery is when a stock or security must be delivered to the buyer. It is the point in time at which the transaction is considered closed.
Debt Fund
A debt fund is an investment fund that primarily invests in fixed-income securities, such as government or corporate bonds. Its objective is to provide steady returns with relatively lower risk than equity investments like stocks.
Holding Period
The holding period is defined as the time in which an investor retains the property of a stock or investment before selling it. The longer the holding period in most cases, the better the returns.
Offer Date
The offer date is when securities, such as stocks or bonds, are first made available to the public for purchase. This date is determined during the underwriting process, which involves setting the terms and conditions of the offering.
Trading Account
A trading account is a specialised account with a broker that holds cash and securities for buying, selling, and investing in financial markets. Unlike a regular bank account, it is designed for trading stocks, bonds, and other assets. It serves as a gateway to execute and manage investment transactions.