GISI Securities Course Professional Level key terms

A formal legal document that must be published when a company offers securities to the public, disclosing the issuer's business, financial condition, risks, and the terms of the offering so investors can make an informed decision.

The ongoing duty of listed issuers to publish timely, accurate, and complete information about material events, financial results, and governance so that all investors have equal access to price-sensitive information.

Illegal conduct in financial markets that undermines integrity, chiefly insider dealing, unlawful disclosure of inside information, and market manipulation such as false trading or price distortion.

Trading or encouraging others to trade in securities while in possession of material non-public information, or disclosing such information improperly, in breach of a duty of confidence.

The market in which new securities are issued and sold by companies or governments to investors, raising fresh capital for the issuer rather than transferring ownership between investors.

The market where previously issued securities are bought and sold among investors, providing liquidity and price discovery without directly raising new capital for the issuer.

An internal information barrier within a financial firm that separates departments such as corporate finance and research from trading desks to prevent the improper flow of confidential or price-sensitive information.

A basic equity security representing ownership in a company, typically carrying voting rights and a residual claim on profits and assets after all creditors and preferred shareholders are paid.

A class of equity that usually pays a fixed dividend before ordinary dividends and has priority over ordinary shares on winding up, but often lacks voting rights and has limited upside.

A ratio showing annual dividend per share divided by the share price, expressed as a percentage, indicating the income return an investor receives relative to the cost of the shares.

A feature of certain preference shares requiring that any missed dividend payments accumulate and must be paid in full before ordinary shareholders can receive any dividend.

A valuation multiple calculated as the share price divided by earnings per share, showing how much investors pay for each unit of current earnings and often used to compare relative value.

A company's net profit attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding, a key measure of profitability on a per-share basis.

A debt security under which the issuer borrows a principal amount from investors and promises to pay periodic interest, known as the coupon, and to repay the principal at maturity.

The annual interest rate stated on a bond, expressed as a percentage of its nominal or face value, which determines the fixed cash payments made to bondholders.

The total annual return an investor would earn by holding a bond to maturity, assuming all coupon and principal payments are made on time and reinvested at that same rate.

A measure of a bond's price sensitivity to changes in interest rates, often expressed in years, reflecting the weighted average time until cash flows are received and the resulting price risk.

An independent assessment, usually expressed as a letter grade, of a borrower's ability and willingness to meet its debt obligations in full and on time.

A financial instrument whose value is derived from an underlying asset, index, rate, or event, commonly used for hedging risk or for speculation, and typically settled in cash or by delivery.

A contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a set date, in exchange for a premium.

A standardized, exchange-traded agreement to buy or sell an underlying asset at a predetermined price on a future date, with both parties obligated to perform and subject to daily margin settlement.

A pre-packaged investment that combines traditional securities, such as bonds or shares, with one or more derivatives to create a tailored risk and return profile, often with capital protection or enhanced yield features.

The price paid by an option buyer to the option seller for the rights granted by the contract, reflecting factors such as the underlying price, volatility, time to expiry, and interest rates.

Cash or collateral that an investor must deposit with a broker or clearing house to cover potential losses on leveraged or derivative positions, often adjusted daily through variation margin.

An arrangement in which multiple investors pool money into a single fund managed by a professional firm, with the fund's assets held separately and investors receiving units proportionate to their contributions.

The total value of a fund's assets minus its liabilities, divided by the number of units outstanding, representing the per-unit value at which investors buy or redeem fund shares.

A collective investment scheme that can issue and redeem units on an ongoing basis at prices based on net asset value, providing investors with liquidity but requiring active portfolio management.

The process of dividing a portfolio among asset classes such as equities, bonds, and cash to balance risk and return in line with an investor's objectives, time horizon, and risk tolerance.

A risk-management technique that spreads investments across different assets, sectors, or regions so that poor performance in any one holding has a limited effect on the overall portfolio.

An investor's willingness and financial ability to accept fluctuations in portfolio value or potential losses in pursuit of higher returns, shaped by goals, time horizon, and personal circumstances.

Risk that affects the entire market or a broad segment of it, such as interest rate changes or economic recessions, and cannot be eliminated through diversification within a single asset class.

The risk of losses arising from movements in market prices, including changes in equity prices, interest rates, foreign exchange rates, and commodity prices that affect the value of positions.

The risk that changes in interest rates will reduce the value of fixed-income investments or increase funding costs, with longer-duration bonds typically being more sensitive to such changes.

The risk that a borrower or counterparty will fail to meet its contractual payment obligations in full or on time, causing a loss to the lender or investor.

The risk that an asset cannot be sold quickly at a fair price, or that a firm cannot meet its payment obligations as they fall due, often worsening during market stress.

The structured process of identifying, measuring, monitoring, and controlling exposures to financial and operational risks so that they remain within limits consistent with an organization's objectives.

The obligation of a financial firm to ensure that a recommended product or service is appropriate for a client's investment objectives, financial situation, knowledge, and risk tolerance before providing advice.

The process by which a financial firm collects and verifies information about a client's identity, financial circumstances, investment experience, and objectives to provide suitable services and prevent financial crime.

A legal obligation to act in the best interests of another party, requiring loyalty, good faith, and full disclosure, and placing the client's interests ahead of the adviser's own.