Glossary

Accredited investor
Refers to a wealthy investor (net worth S$2 million or annual income in the preceding year > S$300,000).

Ask

This is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock; also called the offer price.

Bid
The price a potential buyer is willing to pay for a security. Sometimes also used in the context of takeovers where one corporation is bidding for (trying to buy) another corporation. In trading, we have the bid-ask spread which is the difference between what buyers are willing to pay and what sellers are asking for in terms of price.

Blue-chip company
Used in the context of general equities. Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends.

Bond
Bonds are debt instruments and are issued for a period of more than one year. The government, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time..

Buy in

The repurchase of securities at the seller's risk when he fails to deliver securities to the buyer by due date.

Closing price

Price of the last transaction of a particular stock completed during a day's trading session on an exchange.

Commission

The fee paid to a trading representative to execute a trade, based on volume traded and/or their dollar value.

Debt instrument

An instrument that allows the issuing party to raise funds with the promise to repay the lender in accordance to the specifications of the contract, such as a government bond or treasury bill.

Delinquency

State whereby investor’s account is frozen as a result of overdue unpaid debt.

Delisting

Removal of a company's security from listing on an exchange because the firm has not abided by specific regulations.

Derivative instruments

Contracts such as contracts for difference (CFDs), options and futures whose price is derived from the price of an underlying financial instrument like stocks.

Dividend

A portion of a company's profit paid to shareholders.

Dollar cost averaging

Method of purchasing securities by investing a fixed amount of money at set intervals.

Fixed income instruments

Instruments that pay a fixed dollar amount, such as bonds and treasury bills.

Fund manager

The person whose responsibility is to oversee the allocation of the pool of money invested in a particular unit trust. The fund manager is charged with investing the money to attain the returns and level of risk of the unit trust investors.

Hedge fund

A fund that may employ a variety of techniques to enhance returns, such as both buying and shorting stocks according to a valuation model.

Initial public offering (IPO)
A company's first sale of stock to the public.

Intraday

Term meaning "within the day," often to refer to the high and the low price of a stock.

Listed firm

A company whose stock trades on a stock exchange.

Managed account
An investment portfolio entrusted to a manager who decides how to invest it.

Margin

Allows investors to buy securities by borrowing money from a broking house. The margin is the difference between the market value of a stock and the loan made.

Margin account
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are regulated, but margin requirements and interest may vary among broking houses.

Margin call

A demand for additional funds because of adverse price movement.

Mark-to-market

Adjustment of the value of a security to reflect current market value.

Odd lot

A trading order for less than the actual board lot.

Over-the-counter (OTC)

Not listed or traded on the exchange.

Portfolio
A collection of investments.