NCFM Financial Markets (Beginners) flashcards
NCFM Financial Markets (Beginners) · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Free-float market capitalisation
- Market value of a company's shares that are freely tradable, excluding promoter, government, and strategic holdings. Nifty 50 weights constituents by this measure.
- Index divisor
- A number used to scale the aggregate market capitalisation of index constituents so that corporate actions and constituent changes do not disturb the index level.
- T+1 settlement
- Trade date plus one business day. Indian equity cash trades settle on T+1, with the clearing corporation guaranteeing funds and securities pay-in and pay-out.
- Circuit limit
- A price band set by the exchange around a scrip's previous close, commonly 2%, 5%, 10%, or 20%, beyond which trades are not accepted during the session.
- Rights issue
- An offer of new shares to existing shareholders in proportion to their holdings, usually at a discount, preserving their pre-emptive right before the shares are offered to outsiders.
- Emerge platform
- NSE's dedicated listing platform for small and medium enterprises. It uses a simplified offer document and requires a market maker for at least three years after listing.
- SME market maker
- An entity appointed on the Emerge platform to provide continuous two-way quotes for an SME scrip, supporting liquidity for a minimum period after listing.
- SME migration to main board
- The process by which an Emerge-listed company moves to the main board after meeting SEBI and exchange criteria on paid-up capital, profitability, and shareholder count.
- Net asset value
- Total assets minus total liabilities of a mutual fund scheme, divided by units outstanding, computed at end-of-day prices and used for purchase and redemption.
- Total expense ratio
- The annual cost of running a mutual fund scheme as a percentage of average daily net assets, capped by SEBI by category and disclosed daily.
- Exit load
- A redemption charge levied on mutual fund units, usually for early exit, paid back into the scheme and disclosed in the Scheme Information Document.
- Systematic investment plan
- A facility under which an investor buys mutual fund units at regular intervals at the applicable NAV, averaging purchase cost over time.
- Call option intrinsic value
- For a call option, the amount by which the spot price exceeds the strike price, floored at zero. Premium minus intrinsic value gives time value.
- Mark-to-market margin
- The daily cash settlement of gains and losses on open derivatives positions, based on the day's settlement price, required in addition to initial margin.
- Open interest
- The number of derivative contracts outstanding at a point in time. Rising price with rising open interest is read as a long build-up.
- Option delta
- A Greek measuring the change in an option's premium for a one-unit change in the underlying price, ranging from 0 to 1 for calls.
- USD/INR futures lot
- The standardised contract on NSE's currency segment for 1,000 US dollars, quoted in rupees per dollar and cash-settled against the RBI reference rate.
- Currency hedge direction
- A hedger who will receive foreign currency sells currency futures, while one who must pay foreign currency buys futures, offsetting the exposure.
- JPY/INR quotation
- The currency pair quoted as rupees per 100 Japanese yen, with a contract size of 100,000 yen on NSE's currency derivatives segment.
- Contango and backwardation
- Contango means futures prices trade above spot, reflecting carry costs. Backwardation means futures trade below spot, often reflecting near-term scarcity.
- Commodity contract specification
- The exchange-defined terms of a commodity futures contract, including trading unit, quotation, tick size, delivery grade, and delivery centres.
- Commodity hedge direction
- A producer fearing a price fall sells commodity futures, while a consumer fearing a price rise buys futures, both offsetting physical price exposure.
- Modified duration
- A measure of a bond's percentage price change for a 1% change in yield. Higher modified duration means greater interest rate sensitivity.
- Interest rate swap
- An agreement to exchange fixed and floating interest payments on a notional principal. The rupee overnight indexed swap is the standard benchmark.
- Cheapest-to-deliver bond
- The bond in the deliverable basket that costs least to buy and deliver against a bond futures contract, and which therefore drives the futures price.
- Yield to maturity
- The single discount rate that equates a bond's future coupon and principal cash flows to its current market price, assuming the bond is held to maturity.
- Treasury bill
- A zero-coupon Government of India instrument issued at a discount and redeemed at face value, with maturities of up to 364 days.
- Dirty price
- A bond's clean quoted price plus accrued interest since the last coupon date. Settlement in the market is normally on the dirty price.
- Credit spread
- The yield difference between a corporate bond and a comparable government security, widening when the issuer's credit rating falls.
- Book building
- An IPO price-discovery process in which investors bid across a price band. The cut-off price at which the issue is finally priced is set after the book closes.
- Anchor investor
- A qualified institutional buyer allotted shares before an IPO opens, subject to SEBI allocation limits and a lock-in on the allotted shares.
- ASBA application
- An IPO application under which the bid amount is blocked in the investor's bank account rather than debited, and is released if no allotment is made.