NISM Series XII (SMF) flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Primary market
- The segment where an issuer raises fresh capital by issuing new securities to investors, with proceeds going to the issuer. Examples are IPOs, FPOs, rights issues, and preferential allotments.
- Secondary market
- The segment where already-issued securities are bought and sold among investors. The issuer receives no proceeds; the market provides liquidity and price discovery through exchanges and OTC platforms.
- SEBI
- The Securities and Exchange Board of India, a statutory regulator under the SEBI Act, 1992, mandated to protect investors, develop the securities market, and regulate intermediaries and market infrastructure.
- Dematerialisation
- The process of converting physical share certificates into electronic form held in a demat account. It is initiated by the investor through a depository participant using a dematerialisation request form.
- Depository participant
- A SEBI-registered intermediary that acts as the investor's agent for opening and maintaining a demat account and for processing transfers, pledges, and corporate action entitlements.
- T+1 settlement
- A rolling settlement cycle in which trades are settled on the next trading day after the trade date, with pay-in of funds and securities and pay-out to buyers and sellers.
- Contract note
- A document issued by the broker within 24 hours of trade execution showing trade details, brokerage, taxes, and the net amount payable or receivable by the client.
- Unique Client Code
- An identifier assigned by a broker to each client so that every order and trade can be mapped to the correct client for margining, settlement, and regulatory reporting.
- Market order
- An order to buy or sell at the best price currently available in the market. It prioritises execution certainty over price certainty and may execute at multiple prices.
- Limit order
- An order to buy or sell only at a specified price or better. It prioritises price certainty over execution certainty and may remain unexecuted if the market does not reach the limit.
- Stop-loss order
- An order that becomes active only when a specified trigger price is reached, then executes as a market or limit order to limit further losses on an existing position.
- Circuit breaker
- A mechanism that halts trading temporarily when an index or scrip moves beyond a prescribed threshold, allowing information to disseminate and preventing panic-driven volatility.
- Price band
- The maximum permitted daily price movement for a scrip, set by the exchange at levels such as 2%, 5%, 10%, or 20% of the previous closing price.
- Market capitalisation
- The total market value of a company's outstanding equity shares, calculated as the current share price multiplied by the number of shares outstanding. Used to classify large, mid, and small caps.
- Free-float market capitalisation
- Market capitalisation calculated using only shares available for public trading, excluding promoter and strategic holdings. NSE indices such as the Nifty 50 use this method.
- Price-to-earnings ratio
- The market price per share divided by earnings per share. It indicates how much investors pay for each rupee of earnings and is used to compare relative valuation across companies.
- Earnings per share
- Net profit attributable to equity shareholders divided by the weighted average number of equity shares outstanding during the period. It is a key input to the P/E ratio.
- Dividend yield
- Annual dividend per share divided by the current market price per share, expressed as a percentage. It measures the income return from dividends relative to price.
- Book value per share
- Total shareholders' equity minus preference share capital, divided by the number of equity shares outstanding. It represents the accounting net worth attributable to each equity share.
- Yield to maturity
- The discount rate that equates the present value of a bond's future coupon payments and principal repayment to its current market price, assuming the bond is held to maturity.
- Mutual fund NAV
- Net Asset Value equals total assets minus total liabilities, divided by the number of units outstanding. Open-ended schemes transact at NAV, computed daily.
- Total expense ratio
- The annual cost of managing a mutual fund scheme, expressed as a percentage of average daily net assets. It includes management fees and administrative expenses and is capped by SEBI.
- Systematic investment plan
- A facility that invests a fixed amount in a mutual fund scheme at regular intervals, averaging the purchase cost over time and instilling investment discipline.
- Exchange-traded fund
- An open-ended scheme listed on an exchange whose units trade intraday at market prices. Authorised participants create and redeem units to keep price close to NAV.
- Real estate investment trust
- A SEBI-regulated listed vehicle that pools income-producing real estate assets and distributes at least 90% of net distributable cash flows to unitholders.
- Insider trading
- Trading in securities while in possession of unpublished price-sensitive information. It is prohibited under SEBI regulations and attracts penalties and debarment.
- Price-sensitive information
- Information that, if disclosed, would materially affect the price of a security. Trading on such information before public disclosure is prohibited.
- Securities Transaction Tax
- A tax levied on the value of taxable securities transactions, including delivery-based equity trades, intraday equity sales, and derivatives transactions, collected by the exchange.
- Margin trading facility
- A facility allowing a client to buy securities by paying part of the value, with the broker funding the balance against pledged securities, subject to SEBI margin norms.
- Mark-to-market settlement
- The daily crediting or debiting of profits and losses on open futures positions based on the day's closing price, preventing accumulation of unrealised losses.
- SPAN margin
- A risk-based margin computed by the clearing corporation on the portfolio of derivative positions, estimating the maximum plausible loss over a one-day horizon.
- Settlement guarantee fund
- A fund maintained by the clearing corporation, funded by member contributions and reserves, used to meet obligations if a member defaults on settlement.