The new investor’s glossary: N to P

Fsp Invest, 27 Jan. 2014

Tags: investment, glossary, definitions, terminology, investing, investors glossary, net asset value, new issue, nominee accounts, offer, order, ordinary shares, price earnings ratio, pe ratio, penny shares, portfolio, preference shares, privatisation, prospectus, public offer,

Do you want to understand your ordinary shares from your preference shares and your net asset value from your price earnings ratio? The ‘lingo’ that comes with investing may leave you wondering whether investing is for you. But the good news is that by getting to grips with a few key definitions will make the process a whole lot easier. Read on to uncover the most important investing terms starting with N to P…

Understanding stock market terminology will help you on your path to investing, the research team at Red Hot Penny Shares explain…

Your vital investment glossary

Net asset value (NAV): This is the company’s shareholders’ funds divided by the number of shares in issue. In theory, if the company stopped trading and shared out its assets, each shareholder would receive this amount per share.

New issue: These are shares coming onto the stock exchange for the first time.

Nominee accounts: An account where a person or company holds shares on behalf of an investor.

Offer: This is the price a market maker or seller will offer you for a share you own.

Order: This is an offer to sell, or a bid to buy, an agreed quantity of securities, such as shares, at a fixed or determinable price.

Ordinary shares: This is the most common form of share. Holders of ordinary shares receive dividends that vary in amount in line with the profitability of the company and recommendation of directors. The shareholders are the owners of the company.

Price earnings ratio (PE): This is the market price of a share divided by its after -tax earnings.

Penny shares: Shares valued at less than R10 in South Africa. There is no fixed, or standard definition but globally people define these shares as under $1 or £1.

Portfolio: An investor’s collection of shares.

Preference shares: These are shares bearing a fixed annual rate of dividend. They have a right over all ordinary shares in the distribution of dividends from annual profits. And they have claim to repayment of capital on a winding-up of the company before ordinary shares.

Privatisation: The process of converting former state-run companies into publicly listed companies. They’re generally new issues made available directly to private investors.

Prospectus: This is a detailed document that accompanies new issues of shares from a company.

Public offer: This is an offer made by a company to the public to subscribe to its issue of shares. The company must make the offer by way of a prospectus with instructions of how to apply.

You can check out L to M here.

So there you have it, your new investor’s glossary from N to P.

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