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Glossary in alphabetical order
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Accrued Interest:
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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.
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Acquisition:
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Acquiring control of one corporation by another.
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Annual Report:
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Listed companies issue an annual report that includes the financial statement for a former year. The report shows assets, liabilities, revenues, expenses and earnings. The report also shows the company's financial position at the end of the business year and any other useful information for shareholders.
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Asset:
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Anything a company owns, including cash investments and property..
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Auditor’s Report:
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It is the statement of the accounting firm and its opinion of the corporation’s financial statements being audited.
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Balance Sheet:
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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.
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Bear Market:
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A condition when prices of stocks, in the stock market, are generally declining.
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Beta Coefficient:
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The degree of risk which cannot be decreased by diversification.
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Bid and Ask:
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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.
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Block Order:
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A large transaction of a stock order - 10,000 shares or more.
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Blue-Chip Stock:
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A stock with a reputation for quality, reliability and the ability to operate profitably in good and bad times.
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Board of Directors:
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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.
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Bond:
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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.
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Book Value:
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An accounting term. The book value of a stock is determined from the company's records, through deducting total liabilities from total assets. The outcome is then divided by the number of common shares outstanding.
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Member Firm:
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It is a company that has the license to perform their activities in the stock market. Members include brokerage firms, primary dealers, custodians and market makers
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Bull Market:
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A condition when prices of stocks are generally rising.
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Callable Bond:
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A bond issue, all or parts of which may be redeemed by the issuing company before maturity.
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Capital Gain:
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Profit made on securities, by selling the securities for a higher price than they originally were bought for.
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Capitalization Weighted Index:
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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.
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Clean Price:
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The clean price of a bond is equal to its gross price minus accrued interest.
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Closing Price:
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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.
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| Close-end Fund: |
Close-end funds are investment funds tradable on the stock exchange where it can be bought or sold like any other security. |
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Common Stock:
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Investors who purchase common stock have voting rights at the annual general assembly meeting. Common Stockholders are guaranteed dividends, if the company achieves profit and if the Board decided to distribute all or some of this profit. If a company fails or liquidates, common stockholders are paid after bondholders and preferred stockholders.
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Convertible Bond:
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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.
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Corporate Bond:
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A bond issued by a corporation.
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Current Assets:
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Those assets of a company that are expected to be realized in cash, or sold, or consumed during one year. These include cash, treasury and receivables.
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Current Liabilities:
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Money owed and payable by a company, usually within one year. e.g. Accounts payable, wages payable, dividends payable etc.
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Current Yield:
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Bond's current yield on a bond is equal to the current coupon paid divided by its clean price.
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Diversification:
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A strategy of spreading investments among different securities or sectors to reduce the risk of owning one single investment
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Dividend:
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Are profits distributed proportionally among shareholders depending on the company’s profits and availability of liquidity, however the Board of Directors may decide not to distribute profits and to re-invest it in other expansionary projects or to buy other assets.
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Dividend Yield:
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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.
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EGX 30 Index:
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EGX 30 Index, previously known as CASE 30 Index, is an index that includes the top companies in terms of liquidity and activity.. 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. For more information regarding this index and other EGX indices, click here
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Ex-Dividend:
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A synonym for “without dividend.” The buyer of a stock selling ex-dividend does not receive the recently declared dividend.
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Face Value:
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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 Value).
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Fiscal Year:
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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).
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| FRA: |
The Financial Regulatory Authority established in July 2009, replacing the Egyptian Insurance Supervisory Authority, the Capital Market Authority, and the Mortgage Finance Authority. FRA 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. |
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Free Float %:
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Free float % means the portion of freely floated shares that are traded and held by the public at large.
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Free-Floated Shares:
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Free-floated shares are all shares of the company listed on the Egyptian Exchange that are available for sale or purchase by public, after excluding shares held for long term investment or held in compliance with certain legal rules (founders' shares, shares frozen in accordance with listing rules, pledged shares..... etc). Shares are considered free-floated shares if it represents less than 10% as well as being non-held for retaining. Worth mentioning that the shares of the Egyptian listed companies owned by the foreign depository banks in the form of Global or American depository receipts are not considered free floated shares as they are not available for trading in the Egyptian market.
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Fundamental Analysis:
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It includes industry and company analysis in terms of sales, assets, profits, products or services, markets and management, to reach conclusions concerning stock fair value, decisions to sell, buy or keep stocks. it also takes into consideration gross national product, interest rates, unemployment and savings etc.
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GDR:
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A Global Depositary Receipt or GDR is a security issued by a Depository Bank, such as Bank of New York or Deutsche Bank, in USD or any other foreign currency and is backed by local shares, thereby facilitating the trading of those Egyptian shares in the form of GDRs by international investors, on global markets, such as London. For more information about GDRs, click here.
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Government Bond:
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A bond issued by the government.
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Gross Price:
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The gross price of a bond is equal to its clean price plus its accrued interest.
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Holding Company:
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A corporation that owns the securities of another, in most cases with voting control rights.
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Income Statement:
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A report on a company's financial status over a period of time. It shows revenues earned, expenses incurred, profits and losses.
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Index:
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An index is a numerical value used to measure changes in financial markets. The index is set at a numerical level e.g. 1000 on the base period or starting point against which a percentage change can be compared to at any particular point of time. Indices often serve as barometers for a given market or sector and benchmarks against which financial or economic performance is measured
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| Inflation Rate: |
An important economic indicator. It is the rate at which prices are rising. |
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Institutional Investor:
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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.
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Investment Bank:
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Also known as an underwriter, the “middleman” between a corporation issuing new securities and the public.
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Investment Company:
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A company that uses its capital to invest in other companies.
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Investment Portfolio:
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A variety of securities owned by an individual or an institution.
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ISIN Code:
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ISIN means International Securities Identification Number. It is a unique international code which identifies a securities issue.
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Liabilities:
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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.
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Liquidity:
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The ability to easily turn assets into cash. An investor should be able to sell a liquid asset quickly with a little effect on its price.
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Listed Stock:
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The stock of a company that is traded on a securities exchange. Stock exchanges have different listing rules. For more information about EGX Listing Rules, click here.
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Market Price:
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The last reported price at which the stock or bond sold, or the current quote.
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Maturity Date:
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The date that a bond comes due and must be paid off.
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Member or Broker:
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A securities brokerage firm, organized as a corporation, which is allowed to trade on EGX.
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Merger:
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Combination of two or more corporations.
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| Net Asset Value (NAV): |
Market value of all the fund’s assets minus the value of its liabilities, divided by the number of certificates outstanding |
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Odd Lots:
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Stock transactions that involve less than or equal to 100 shares.
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Offer:
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The price at which a person is ready to sell. Opposed to bid, the price at which one is ready to buy.
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Open-end Fund:
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A type of fund sold to investors directly and is not traded on the stock exchange. If the investor is no longer interested in owning these certificates he can give them back to the fund issuer. |
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Overbought:
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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”.
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Oversold:
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The reverse of overbought. The price of a single security or a market which has declined to an unreasonable level.
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OTC:
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This term may refer to transactions over-the-counter market in unlisted securities. The OTC market in Egypt is divided into two markets: Deals Market and Orders Market.
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Par Value:
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Equal to the nominal or face value of a security.
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Preferred Stock:
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A class of stocks that give its holders additional rights that the common stockholders do not enjoy. For example, preferred stockholder have the priority to claim their rights over common stockholders if the company fails or liquidates.
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Price-Earnings Ratio:
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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-month period.
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Prospectus:
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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.
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Public Offering:
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When a company sells shares to the public to raise capital.
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Recession:
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A period of no or negative economic growth and high unemployment.
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Redemption Price:
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The price at which a bond may be redeemed at maturity.
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Return on Assets:
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Net earnings after tax of a company divided by its assets.
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Return on Equity:
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Net earnings after tax of a company divided by its equity.
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Right to vote:
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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.
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Rights Issue:
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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 that each one owns. This process is done 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.
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Secondary Market:
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When stocks or bonds are traded between buyers and sellers (and not the issuing company and buyers as in the primary market), they are said to be traded on the secondary market.
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Settlement:
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Conclusion of 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. For more information regarding the settlement process at EGX, click here
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Stock Split :
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A process that results in increasing the number of company’s shares that constitutes the capital, without increasing the ownership rights. This leads to decreasing the market value of the stock. 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.
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Stock Dividend:
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A dividend paid in securities rather than cash. The dividend is usually additional shares of the issuing company.
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Stock Exchange:
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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.
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Registered Stockholder:
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A stockholder whose name is registered in the books of the issuing corporation.
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Stockholders’ Equity:
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The value of all the stock owned by the shareholders of a particular company. Also known as net worth. (paid-up capital + revenues + retained earnings)
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Syndicate:
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A group of investment banks who together underwrite and distribute a new issue of securities or a part of it.
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Technical Analysis:
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Studying past trends to predict future price movements and supply and demand quantities.
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Ticker:
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A telegraphic system that continuously provides last prices, volumes and number of transactions.
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Transfer of Ownership:
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It is a two-step process. The first step, the delivery of a stock certificates from the seller’s broker to the buyer’s broker and legal change of ownership, normally accomplished within a few days after trade date. Then is to record the change of ownership on the books of the corporation by the transfer agent.
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Treasury Stock:
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Stocks that the issuing company rebuy from the market. Treasury stock receives no dividend and has no vote while held by the company.
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Turnover Ratio:
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It is a ratio calculated by dividing Shares’ value traded by the market capitalization of listed shares.
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Unlisted Stock:
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A security not listed on a stock exchange.
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Volatility:
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The relative rate at which the price of a security moves up and down.
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Yield to Maturity or Redemption Yield:
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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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