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2017/2018 NSE FACT BOOK 2017/2018 NSE FACT BOOK
The Performance Documentary of Listed Nigerian Companies The Performance Documentary of Listed Nigerian Companies

GLOSSARY OF INVESTMENT & MARKET TERMS

The Nigerian Stock Exchange (NSE) has provided this unbiased evalua on. An auditor can be an internal Broker (or stock broker or dealing clerk) – An individual provide efficiency and stability to the financial markets
informa on as an educa onal service to investors. employee or an external consultant. that executes buy and sell orders submi ed by an investor. they operate in. Clearing houses benefit both par es in a
The informa on provided is not a legal interpreta on They are the only persons permi ed/licensed to transact transac on, because they bear most of the credit risk. If
of regulator policy. Investors who have ques ons Bid/Ask prices – The “bid”is the highest price a buyer will business on the floor of the Stock Exchange or in the OTC two individuals deal with one another directly, the buyer
about the meaning or applica on of any of the pay to buy a share of stock at any given me. The “ask” is market. A broker must be employed by a dealing member, bears the credit risk of the seller, and vice versa. When a
the lowest price at which the seller will sell the stock. The and must pass both the Chartered Ins tute of Stockbrokers clearing house is used, the credit risk that is held against
Informa on provided should consult with a cer fied
bid price is almost always lower than the ask price. This Cer fica on and the Nigerian Stock Exchange Authorised both buyer and seller is held by the house.
and licensed stock broker, investment advisor or
financial advisor. informa on is only seen by brokers and investors who have Clerkship Training Programme to be licensed to trade on
access to a trading screen. These prices fluctuate the NSE floor. Stock brokers provide advice and make Closed-end fund (or closed-end investment or closed-end
throughout a trading day as shares are bought and sold. recommenda ons to their clients, but must have a client company) – A collec ve investment with a limited number
‘Admi ed to trading' – The official term used when a instruc on before execu ng a trade on behalf of that client. of shares. It is a publicly traded investment company that
security is listed and tradable; same as 'admi ed to the
They usually charge a commission for the services they raises a prescribed amount of capital only once through an
Daily Official List'.
Bonds – Debt investments in which an investor loans render to their clients. ini al public offering (IPO). The shares are listed and traded
money to an en ty (corporate or governmental) that on an exchange. Stocks of a closed-end fund represent an
Analyst – A financial professional who has exper se in borrows the funds for a defined period of me at a fixed Broker-Dealer (or dealing member) – Company or interest in a specialized por olio of securi es. The por olio
evalua ng investments and puts together "buy", "sell" or
interest rate. Bonds are used by companies, states and individual that is both a broker and a dealer. is managed by an investment adviser. The securi es in the
"hold" recommenda ons for securi es. They may be also
federal governments to finance a variety of projects and por olio typically concentrate on a specific industry,
known as a "financial analyst" or a "security analyst". ac vi es. Bonds are commonly referred to as fixed-income Capital stock – Shares authorized by a firm's charter and geographic market or sector. The stock price of the fund
Analysts are typically employed by brokerage firms, securi es and are one of the three main asset classes, having par value, stated value or no par value. Capital stock fluctuates with the changing values of the securi es in the
investment advisors or mutual funds. They do the alongside stocks and cash/cash equivalents. The indebted is any of various shares of ownership in a business. They fund's holding, and as shares of the fund are bought and
underground work for brokers, preparing the research they
en ty (issuer) issues a bond that states the interest rate include common stock of various classes and any sold.
use for trading. Analysts usually specialize in specific
(coupon) that will be paid and when the loaned funds preference stock that is outstanding. If a firm has only a
industries or sectors to allow for comprehensive and (principal) are to be returned (maturity date). Interest is single class of capital stock outstanding, the terms common Common stock –See Stock.
specialized research capacity.
usually paid every six months (semi-annually) and in some stock and capital stock are o en used interchangeably. The
cases, annually. The main categories of bonds are number and the value of issued shares are usually shown, Corporate bond (or corporate loan or corporate note or
Ask price – See Bid/Ask prices.
corporate bonds, federal bonds and state bonds, notes and together with the number of shares authorized, in the debenture)–A bond issued by a company. It is a bond that
bills, commonly referred to as “Treasuries”. Two features of capital accounts sec on of the balance sheet. the company sells to “borrow” money in order to expand
Asset – There are mul ple defini ons of an asset: 1. a bond—credit quality and dura on—are the principal its business. The company promises to pay the investor (the
Something valuable that an individual or en ty owns, determinants of a bond's interest rate. Bond maturi es Central Securi es Depository (CSD) – A specialized lender) back on a future maturity date and pay interest in
benefits from or has use of, in genera ng income. 2. An range from a 90-day treasury bill (T-bill) to a 30+ year financial ins tu on that holds securi es such as shares in a the mean me. There are different kinds of corporate
item with economic value that an individual, corpora on or
government bond; corporate and states are typically in the physical (cer ficated) or dematerialized (exis ng solely as bonds. In some cases, repayment may be secured by
country owns or controls with the expecta on that it will
three (3) to 10-year range. electronic records) so that ownership can be easily specific assets (e.g., cash, securi es, real estate or
provide future benefits. 3. Property (not only real estate) transferred via a book entry rather than physically. equipment) which can be seized, if the company fails to pay
owned by a person or company, regarded as having value Bonus issue (or scrip issue or stock split or capitaliza on A CSD may provide other services such as electronic interest or return the original principal when the bond
and available to meet debts, commitments or legacies.
issue) – A corporate ac on in which a company's exis ng clearing and se lement of securi es, as well as services matures. Others that are not secured (debentures) are
shares are divided into mul ple shares. The issue of shares such as securi es borrowing and lending. See CSCS. merely promises to pay the investor back, as documented
Asset alloca on – An investment strategy that aims to to shareholders is in propor on to their exis ng holdings. A in an agreement called an indenture. Corporate bonds do
balance risk and reward by appor oning a por olio's assets company may decide to distribute such shares as an Clearing and se lement – The clearing and se lement of not give investors an ownership interest in the issuing
according to an individual's goals, risk tolerance and alterna ve to increasing the dividend payout. Although the market transac ons are described as follows: a. Clearing company, but they o en have added features, including
investment horizon ( meline). The three main asset number of shares outstanding increases by a specific relates to iden fying the obliga ons of both par es on giving investors the op on to convert their bonds into the
classes—equi es, fixed-income and cash/cash
mul ple, the total naira value of the shares remains the either side of a transac on. b. Se lement is when the final company's stock, or the company may have the right to buy
equivalents—have different levels of risk and return, and same. In this process, frac ons of shares may arise; they transfer of securi es and funds occur. back the bonds before they mature in order to refinance
each will behave differently over me. Asset alloca on is are o en aggregated and sold, a er which a cash payment, their debt. Typically, globally, there are five main classes of
the single most important thing an investor should in respect of the frac on sold, is made to the appropriate Clearing house (or central counter party clearing house) – issuers of corporate bonds:
prac ce.
shareholder. A financial ins tu on that helps facilitate trading done in
futures markets. A clearing house acts as a third party to 1. public u li es;
Auditor – An individual who is qualified to perform Book building – The process by which an underwriter futures and op ons contracts– i.e., as a buyer to every 2. transporta on companies;
financial and accoun ng audits. An auditor is appointed to a empts to determine the price to offer an IPO based on clearing member seller, and a seller to every clearing 3. industrial corpora ons;
examine, and verify the accuracy of records and financial demand from ins tu onal investors. An underwriter member buyer. While clearing houses are responsible for 4. financial services companies; and
accounts, and to form an opinion about the authen city
"builds a book" by accep ng orders from fund managers, se ling trading accounts, clearing trades, collec ng and 5. conglomerates.
and correctness of such records, by verifying the accuracy indica ng the number of shares they desire and the price maintaining margin monies, regula ng delivery, and
2017/2018 NSE FACTBOOK evidence available. They are expected to perform an 2017/2018 NSE FACTBOOK
and reliability of the recorded transac ons from the
repor ng trading data, their prime responsibility is to
they are willing to pay.

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