Financial Terms for Nigeria Stock Exchange
May 1, 2019 by admin
Filed under Nigeria Stock Exchange
Index
– A way of measuring the value of a section of the stock market. An
index is an imaginary portfolio of securities representing a particular
market or a portion of the market. It is used by investors and
financial managers to describe the market, and to compare the return on
specific investments. Each index has its own calculation methodology
– computed from the prices of selected stocks. As an index is a
mathematical construct, it may not be invested in directly, so it may be
used to construct index mutual funds and ETFs whose portfolios mirror
the components of the index.
Indices (or indexes) – The plural of Index.
Institutional investor – A non-bank entity
with large amounts to invest, such as investment companies, mutual
funds, insurance companies, pension funds, investment banks and
endowment funds. They usually trade securities in large share quantities
or large monetary amounts. Investment adviser (or investment advisor
or financial adviser or financial advisor) – Institutions or
individuals in the business of providing advice to others about
investment securities, for a fee. This service is usually a
supplementary service of a stock broking or issuing house business.
Investment advisers are registered by the statutory regulatory agency,
the Securities and Exchange Commission (SEC) of Nigeria.
Investment bank – An individual or
institution which acts as an underwriter or agent for corporations and
municipalities issuing securities. Investment banks also
have a large role in facilitating mergers and acquisitions,
private equity placements, and corporate restructuring. Unlike
traditional banks, investment
banks do not accept deposits from or provide loans to
individuals. The two main lines of business in investment banking are
(1) trading securities for cash
or for other securities (i.e., facilitating transactions,
market-making) or the promotion of securities (i.e., underwriting,
research, etc.), known as the “sell side”; and (2) dealing with
pension funds, mutual funds, hedge funds and the investing public (i.e.,
consumers of the products and services of the sell-side), known as
the “buy side”.
Investment fund – Collective funds managed by
an investment trust company (a company established with the purpose of
investing in other companies) or a management team. Collect investments
include unit trusts and closed end funds. See Unit trust, Closed-end
fund.
Investment product (or security or investment instrument)
– An instrument (contract) that can be assigned a value and traded.
It represents ownership (stocks), a debt agreement (bonds) or the rights
to ownership (derivatives). The purpose of owning an investment product
(security) is usually to get your money back, or to get more money in
the form of interest, capital appreciation or both . The two main types
of securities are equity and debt. Examples of investment products
include notes, stocks, preference stock, bonds, debentures, options,
futures, swaps, rights, warrants, or virtually any other financial
asset.
Investor – Person or entity that purchases
assets with the objective of receiving a financial return. The assets
an investor may buy vary widely, but include stocks, bonds, real
estate, commodities and collectibles (e. g., art). The portfolio of an
investor commonly includes a variety of assets that balance the rewards
and risks of each investment. See Private investor, Institutional
investor, Professional investor, Foreign investor.
Issuer–
A legal entity that develops, registers and sells securities for the
purpose of financing its operations. Issuers may be corporations,
domestic or
foreign governments, or investment trusts. Issuers are legally
responsible for the obligations of the issue, and for reporting
financial conditions, material
developments and any other operational activities, as required
by the regulations. The most common types of securities issued are
common and preference stocks,
bonds, notes, debentures, bills and derivatives.
Issuing house – A financial institution that engages in finding capital for established companies, for private firms wishing to convert to public companies, or for governments, by issuing shares on their behalf. They are responsible for packaging new issues for subscription and for bringing them to the market, including assembling the team for a new issue, e.g., solicitors, registrars, brokers, etc., preparing the prospectus, and successfully working with the broker to obtain approval from the exchange to list the issue. An issuing house may also be a dealing member, but cannot play the role of issuing house and broker for the same issue.