Financial definitions.

-Here are some financial definitions that will help you in your understanding of general financial jargon.

Below are some common financial terms which will help you with your understanding of general financial discussions and what you may hear and or read in the media and also some of the training which we provide.

Asset Swap:

An asset swap is simply where two parties agree to swap assets which they own. In the Local context this system was used in the light of restrictions placed on investing abroad.

Bonds:

A Bond is a certificate promising repayment of debt issued by a government or by a company on a short term or long term basis. There is a fixed interest rate payment (called the coupon rate) that is guaranteed. In simple terms it is an IOU issued by the government or company, on which they pay you interest at a fixed rate. When you purchase a bond you are lending out your money to the government or company. In return they agree to give you interest and eventually pay you back the amount your lent them.

Bull Market:

A persistent and prolonged period of rising market prices. ┬áIn the financial markets, a “bullish” person believe that prices are about to rise. A bull trend is therefore a trend that is moving upwards. A period of rising prices could also be referred to as a bull run or a bull phase. The opposite of a bull market is a bear market.

Call Deposits:

Money is deposited in an interest bearing account and can be called back on demand. Interest is calculated daily and paid monthly.

Diversification:

The process of spreading investments among several different instruments or markets in order to reduce the overall risk of loss should a single instrument perform poorly.

Dividend:

A dividend is the amount paid per share from the companies after tax profits to its shareholders.

Dividend Yield:

Is the percentage which indicates the dividend payout as a percentage of the share price or unit price. It is calculated as dividends paid over the last year/12 months, expressed as a percentage of the latest share price.

Fixed Deposits:

Money is deposited in an interest bearing account for a fixed period of time. Penalties apply should one withdraw funds before maturity.

Money Market:

The market where short term securities (less than 1 year) are issued and traded.

Stocks & Shares:

What is the difference between stocks and shares? The term “share” generally refers to a single unit (as in “one ordinary share), whereas “stock” refers to a group of shares (as in “my stock in XYZ Ltd, has risen handsomely”). In practice the terms are used interchangeably. In the context of investments, a companies “stock”, means the total number of shares issued by the company.

Stock market & Share market:

refer to the same place.

Thanks to Profile Media for help with providing some of the definitions above.

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