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Glossary in alphabetical order

A
Accrued Interest:
Accrued interest on a bond is calculated by multiplying (the par value of the bond by the coupon rate by the actual number of days between the last coupon payment and settlement day) divided by 365.
Acquisition:
Acquiring control of one corporation by another.
Annual Report:
The formal financial statements issued yearly by any listed corporation. The report shows assets, liabilities, revenues, expenses and earnings. The report also shows the company's financial condition at the close of the business year and any other useful information of interest to shareholders.
Asset:
Anything a company owns, including cash investments and property.
Auditor’s Report:
It is the statement of the accounting firm’s work and its opinion of the corporation’s financial statements, especially, if they conform to the Egyptian Accounting Standards (EAS).
B
Balance Sheet:
A condensed financial statement at a particular date (e.g. 31/12) showing the nature and amount of a company's assets, liabilities and capital. It shows what the company owned, what it owed, and the ownership interest in the company of its stockholders.
Bear Market:
A condition of the stock market when prices of stocks are generally declining.
Beta Coefficient:
The degree of risk which cannot be decreased by diversification. A stock with a beta greater than 1 will rise faster or decline faster than the overall market. A stock with a beta lower than 1 will rise slower or decline slower than the overall market.
Beta:
The degree of sensitivity of a stock in relation to swings in the market.
Bid and Ask:
The bid is the highest price anyone wants to pay for a security at a given time. The ask is the lowest price anyone will take at the same time.
Block Order:
A large transaction of a stock order —10,000 shares or more.
Blue-Chip Stock:
Stock in a company with a reputation for quality, reliability and the ability to operate profitably in good and bad times.
Board of Directors:
The Board of Directors are elected by shareholders, during a General Assembly Meeting, to manage the corporation for a given term. The Board of Directors decide, among other matters, if and when dividends shall be paid.
Bond:
Basically an IOU or promissory note of a corporation, usually issued in multiples of LE 1,000. A bond is an evidence of debt on which the issuing company usually promises to pay the bondholder a specified amount of interest for a specified length of time, and to repay the loan on the expiration date. A bondholder is a creditor of the corporation, not a part owner, as is the shareholder.
Book Value:
An accounting term. The book value of a stock is determined from a company's records, by adding all assets then deducting all debts and other liabilities, plus the liquidation price of any preferred issues. The sum arrived at is divided by the number of common shares outstanding and the result is book value per common share.
Broker or Member:
A broker or member at EGX is an agent who handles the client’s orders to buy and sell securities. For this service, the broker or member charges a commission.
Bull Market:
A condition of the stock market when prices of stocks are generally rising.
C
Callable Bond:
A bond issue, all or parts of which may be redeemed by the issuing company before maturity.
Capital Gain:
Profit made on securities, by selling the securities for a higher price than they originally were bought for.
Capitalization Weighted Index:
A stock index which is computed by adding the capitalization's of each individual stock and dividing by a predetermined divisor. The stocks with the greatest market values have the greatest impact on the index.
Capitalization:
Total amount of various securities issued by a corporation. Capitalization may include, preferred and common stock, and surpluses.
Cash Flow:
Reported net income of a company plus amounts charged for accounts such as depreciation, depletion, amortization, extraordinary charges to reserves, which are bookkeeping deductions and are not paid out in actual Egyptian pounds.
Clean Price:
The clean price of a bond is equal to its gross price minus accrued interest.
Closing Price:
The closing price of a security traded on EGX is the weighted average price which is equal to the total value traded of the security divided by the total volume traded of the same security.
Common Stock:
Investors who purchase common stock have voting rights at the company's annual stockholders’ meeting. Common Stockholders are not guaranteed dividends, buy they expect to receive higher dividends during the company's prosperous periods. If a company fails or liquidates, common stockholders are paid, after bondholders and preferred stockholders.
Convertible:
A bond, which may be exchanged by the owner for common stock, usually of the same company, in accordance with the terms of the issue.
Corporate Bond:
A bond issued by a corporation.
Coupon Bond:
Bond with interest coupons attached. Usually bonds pay either a fixed coupon rate or a variable coupon i.e. floating rating notes that are linked to a given benchmark.
Current Assets:
Those assets of a company that are expected to be realized in cash, or sold, or consumed during one year. These include cash, treasury bills, receivables, cash due usually within one year, and inventories.
Current Liabilities:
Money owed and payable by a company, usually within one year. e.g. Accounts payable, wages payable, dividends payable etc.
Current Yield:
The current yield on a bond is equal to the current coupon paid by a bond divided by its clean price.
D
Diversification:
Spreading investments among different types of securities and various companies in different sectors.
Dividend:
The payment designated by the Board of Directors to be distributed pro-rata among the shares outstanding. For common shares, the dividend varies with the profitability of the company and the amount of cash on hand, and may be omitted if business is poor or if the directors determine to withhold earnings to invest in plants and equipment.
Dividend Yield:
In stocks, the amount of money returned to investors on their investments. It is equal to dividends per share divided by the market price of the share.
E
EFSA:
The Egyptian Financial Supervisory Authority established in July 2009, replacing the Egyptian Insurance Supervisory Authority, the Capital Market Authority, and the Mortgage Finance Authority. EFSA is responsible for the supervision of non-bank financial markets and instruments, including the Capital Market, the Derivative Exchange as well as all activities related to Insurance Services, Mortgage Finance, Financial Leasing, Factoring and Securitization.
EGX:
EGX means The Egyptian Exchange. EGX is the only registered Stock Exchange in Egypt . EGX is one entity with two locations: Cairo and Alexandria . Alexandria Exchange is considered a remote trading floor to the main floor in Cairo . Both Cairo and Alexandria Exchanges use the same software, databases and servers. Both locations are managed by the same Chairman and Board of Directors.
EGX 30 Index:
EGX 30 Index, previously named CASE 30 Index, is an index of the most actively traded 30 listed stocks. EGX 30 index value is calculated in local currency terms and denominated in US dollars since 1998. EGX 30 is a market capitalization weighted index whereby the market capitalization of the index constituents is adjusted by the free float i.e. multiplying market capitalization of each constituent times the percent of free float of each constituent.
EGX 70 Index:
EGX 70 Price Index tracks the performance of the 70 active companies, after excluding the 30 most active constituent-companies of EGX 30 Index. EGX 70 index measures the change in the companies' closing prices, without being weighted by the market capitalization. The index was released on 1 March 2009 and was retroactively computed as of 1 January 2008.
EGX 100 Index:
EGX 100 Price Index tracks the performance of the 100 active companies, including both the 30 constituent-companies of EGX 30 Index and the 70 constituent-companies of EGX 70 Index. EGX 100 index measures the change in the companies' closing prices, without being weighted by the market capitalization. The index was released on 2 August 2009 and was retroactively computed as of 1 January 2006.
Equity:
The ownership interest of common and preferred stockholders in a company.
Ex-Dividend:
A synonym for “without dividend.” The buyer of a stock selling ex-dividend does not receive the recently declared dividend.
Ex-Rights:
A synonym for “Without the Rights”. Corporations raising additional money may do so by offering their stockholders the right to subscribe to new or additional stock, usually at a discount from the prevailing market price. The buyer of a stock selling ex-rights is not entitled to the rights (see Ex-Dividend, Rights).
F
Face Value:
The value of a bond that appears on the face of the bond. Face value is ordinarily the amount the issuing company promises to pay at maturity. Sometimes referred to as par value (see Par).
Fiscal Year:
A corporation’s accounting year. Due to the nature of that particular business, some companies do not use the calendar year for their bookkeeping. The fiscal year of some companies may run from July 1 through the following June 30. Most companies, though, operate on a calendar year basis (1 January -31 December).
Free Float:
Free float means the freely floated shares that are traded and held by the public at large. Strategic ownership by any individual or entity, whether private or public, is excluded from the free float.
Free Float of EGX 30 constituents:
Shareholders, whether private or public companies, banks, funds, entities or individuals (private investors or insiders such as management) owning more than 5% of a company are considered strategic owners and are excluded from the free float of a company. The following entities are also excluded from the calculation of the free float: public sector banks, public insurance companies, public sector companies, any other public institutions or entities, Holding Companies, Employee Share Ownership Associations (ESAs). Also, founders of any listed company, no matter the size of their ownership, are excluded from free float, for the first two years of operation of the company, since they are not allowed to sell their shares, according to the law. Finally, ownership of less than 5% of a listed company by public sector mutual funds is considered free float since public sector mutual funds (banks or insurance companies) are privately managed by private fund management companies.
Fundamental Research:
It includes industry and company analysis based on such factors as sales, assets, profits, products or services, markets and management. As applied to the economy, fundamental research includes consideration of gross national product, interest rates, unemployment, savings etc.
G
GDR:
A Global Depositary Receipt or GDR is a security issued by a Depository Bank, such as Bank of New York or Deutsche Bank,in place of the foreign shares (issued by an Egyptian issuer such as Suez Cement) held in trust by that bank, thereby facilitating the trading of those Egyptian shares in the form of GDRs by international investors, on global markets, such as London.
Going Public:
When a company sells shares to the public to raise capital.
Government Bond:
A bond issued by the government.
Gross Price:
The gross price of a bond is equal to its clean price plus its accrued interest.
Growth Stock:
Stock of a company with a record of earnings growth at a relatively high rate.
H
Holding Company:
A corporation that owns the securities of another, in most cases with voting control.
I
Income Statement:
A report on a company's financial status over a period of time. It shows the revenues earned, the expenses incurred and the net result from operations (net profit/loss).
Indenture:
A written agreement under which bonds are issued, setting forth maturity date, interest rate, and other terms between the issuing company and the bondholders. Usually a trustee or financial institution acts as a watchdog and makes sure that the issuing company fulfills the clauses in the bond indenture. In other words the trustee makes sure that the issuing company is paying interest on time, maintaining certain liquidity and debt ratios, distributing dividends etc.
Index:
An index is a numerical value used to measure changes in financial markets. The index is set at a numerical level on the base period or starting point against which a percentage change can be compared to at any particular point of time. The index measures the moves up and down of stocks or bonds or funds etc. reflecting market price and market direction. A stock index will be the investor’s yardstick for the level of the whole stock market, or a certain group of stocks, against which the performance of individual stocks can be measured or judged.
Inflation Rate:
An important economic indicator. The rate at which prices are rising.
Initial Public Offering (IPO):
A corporation’s first offering of stock to the public.
Institutional Investor:
An organization whose primary purpose is to invest its own funds or those held in trust by it for others. Includes pension funds, investment companies, mutual funds, insurance companies, banks.
Investment Banker:
Also known as an underwriter, the “middleman” between a corporation issuing new securities and the public. The usual practice is for one or more investment bankers (syndicate group) to buy outright from a corporation a new issue of stocks or bonds and then resell it to the public or other institutions.
Investment Company:
A company that uses its capital to invest in other companies.
Investment Portfolio:
A variety of securities owned by an individual or an institution.
ISIN Code:
ISIN means International Securities Identification Number. It is a unique international code which identifies a securities issue.
L
Liabilities:
All the claims against a corporation. Liabilities include accounts, wages and salaries payable; dividends declared payable; accrued taxes payable; fixed or long-term liabilities, such as mortgage bonds, debentures and bank loans.
Liquidity:
Liquidity of the market means how easily one’s financial securities can be converted back into cash. The ability of the market in a particular security to absorb a reasonable amount of buying or selling at reasonable price changes. Liquidity is one of the most important characteristics of a good market.
Listed Stock:
The stock of a company that is traded on a securities exchange. The various stock exchanges have different standards for listing. A summary of the Listing rules of EGX are found under Listed Securities Section of this web site.
M
Market Price:
The last reported price at which the stock or bond sold, or the current quote.
Maturity Date:
The date that a bond comes due and must be paid off.
Member or Broker:
A securities brokerage firm, organized as a corporation, which is allowed to trade on EGX.
Merger:
Combination of two or more corporations.
Mutual Funds:
Mutual funds are usually two types i.e. close-ended and the open-ended. Shares of close-ended funds are listed on EGX, are readily transferable in the open market and are bought and sold like shares of stock. Open-ended funds sell their own new shares to investors, stand ready to buy back their old shares, and are not listed. Open-end funds are so called because their capitalization is not fixed; they issue more shares as people want them.
N
Net Asset Value:
An investment company computes its assets daily, by totaling the market value of all securities owned. All liabilities are deducted, and the balance divided by the number of shares outstanding. The resulting figure is the net asset value per share.
O
Odd Lots:
Stock transactions that involve less than 100 shares.
Offer:
The price at which a person is ready to sell. Opposed to bid, the price at which one is ready to buy.
Overbought:
It refers to a single security or the market as a whole after a period of vigorous buying which, it may be argued, has left prices “too high.”
Oversold:
The reverse of overbought. A single security or a market which has declined to an unreasonable level.
OTC:
This term may refer to transactions over-the-counter market in unlisted securities. The OTC market in Egypt is divided into two marketsDeals Market and Orders Market.
P
Par:
Equal to the nominal or face value of a security.
Portfolio:
Holdings of securities by an individual or institution.
Preferred Stock:
A class of stock with a claim on the company earnings before payment can be made on common stock and usually entitled to priority over common stockholders if the company fails or liquidates.
Price-Earnings Ratio:
A popular way to compare stocks selling at various price levels. The Price Earnings Ratio or P/E ratio is the price of a share of stock divided by earnings per share for a twelve-months period.
Primary Market:
The process by which a corporation’s stock is issued for the first time. It is then sold to the public on the secondary market.
Prospectus:
A document that provides details about a new offering of securities for sale to the public. It gives a detailed financial background of the issuing company, how the proceeds of the securities will be used, and other important information investors will need to make an informed decision.
R
Recession:
A period of no or negative economic growth and high unemployment.
Redemption Price:
The price at which a bond may be redeemed at maturity.
Return on Assets:
Net earnings of a company divided by its assets.
Return on Equity:
Net earnings of a company divided by its equity.
Right to vote:
The right of common stockholders to vote on matters of corporate policy at the General Assembly Meeting. The impact of a stockholder’s vote is proportionate to the number of stock owned.
Rights:
When a company wants to raise more funds by issuing additional securities, it may give its current stockholders the opportunity, or option ahead of others, to buy the new securities in proportion to the number of shares each owns. At an exercise price which is usually lower than the current market price. In most cases they must be exercised within a relatively short period. Failure to exercise or sell rights may result in monetary loss to the holder.
S
Secondary Market:
When stocks or bonds are traded, they are said to be traded on the secondary market.
Settlement:
Conclusion of a securities transaction when a client pays a broker for securities purchased or delivers securities sold and receives from the broker the proceeds of a sale settlement period. In the Egyptian market, settlement day is T+0 for securities traded by the Intra-day Trading System, T+1 for government bonds that are traded through Primary Dealers System and T+2 for all the other listed securities.
Split :
The division of the outstanding shares of a corporation into either a larger or smaller number of shares, without any change in individual shareholder equity. For example, a 2-for-1 split by a company with 1 million shares outstanding and a market price of LE 100 results in 2 million shares outstanding and a market price is LE 50. A reverse split would reduce the number of shares outstanding and each share would be worth more.
Stock Dividend:
A dividend paid in securities rather than cash. The dividend is usually additional shares of the issuing company.
Stock Exchange:
An organized marketplace for securities featured by the centralization of supply and demand for the transaction of orders by member brokers for institutional and individual investors.
Stockholder of Record:
A stockholder whose name is registered on the books of the issuing corporation.
Stockholders’ Equity:
The value of all the stock owned by the shareholders of a particular company. Also known as net worth.
Syndicate:
A group of investment bankers who together underwrite and distribute a new issue of securities or a large block of an outstanding issue.
T
Technical Research:
The technician studies price movements, volume, trends and patterns, which are revealed by charting these factors, and attempts to assess the possible effects of current market action or future supply and demand for securities and individual issues.
Ticker:
A telegraphic system that continuously provides the last sale prices and volume of securities transactions on EGX.
Transfer:
This term may refer to two different operations. For one, the delivery of a stock certificate from the seller’s broker to the buyer’s broker and legal change of ownership, normally accomplished within a few days after trade date. The other meaning is to record the change of ownership on the books of the corporation by the transfer agent.
Treasury Stock:
Stock issued by a company but later reacquired. Treasury stock receives no dividend and has no vote while held by the company.
Turnover Ratio:
The value traded of shares in a year as a percentage of market capitalization of listed shares on an Exchange.
U
Unlisted Stock:
A security not listed on a stock exchange.
V
Volatility:
The measurement of how much an underlying security fluctuates over a period of time.
Voting Right:
The common stockholders’ right to vote their stock in the affairs of a company.
Y
Yield to Maturity or Redemption Yield:
It is the rate of return that equates the present value of the coupons earned on a bond that is kept till maturity plus its par value on maturity date, with its current gross market price. It is greater than the current yield when the bond is selling at a discount and less than the current yield when the bond is selling at a premium.

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