Accrued Interest

Interest which has been accumulated on a debt instrument since the last interest payment date.

 

Acquisition

The purchase of controlling equity interest in a company by another company. Acquisition may be financed by cash or the issuance of securities.

 

Active Market

A stock market with high transaction volumes. Such markets usually display high liquidity.

 

Additional Offering

Subsequent issue of securities to the public or to a select group of investors after an initial (the first) offering of securities. It provides additional funds to a company and enlarges its outstanding shares.

 

Aftermarket Trading

in the securities of a company in the period immediately following a new issue.

 

Allotment

The allocation of securities among various subscribers to a security issue. In Nigeria, preference is given to small subscribers in the allotment of securities in line with the widespread share ownership philosophy of the Federal Government.

 

American Depository Receipts (ADR)

A method of accessing United States’ capital market by foreign issuers. Under the system, the certificate relating to a security issue is registered in the name of and held by a US entity usually a bank, which then issues receipts to investors (subscribers). These receipts are then traded normally in the market.

 

Amortization

The instalmental re-payment of a loan by a debtor over the life span of the loan. This is usually by creating a sinking fund account into which the debtor would make periodic payment which would then be utilized to redeem the loan. Amortization in accounting parlance, however, refers to the gradual reduction of the book value of an intangible asset until completely written-off. Akin to depreciation except that depreciation is used in respect of tangible assets.

 

Annual Report

A document published yearly by a company and distributed to its shareholders showing its operations including financial performance during the fiscal year. The report, which is mandatory for public companies, contains the financial statements, auditors report, chairman’s statement and directors’ report, among others.

 

Annuity

An agreed sum payable to an investor at specified intervals over a period of time or perpetuity, as in the case of interest payment in annuity bonds.

 

Anti-Trust Law

A Legislation which is aimed at preventing business combinations which could create monopolies or restrain competition.

 

Appreciation

An upward movement in the price of a security or in the value of assets.

 

Arbitrage

The purchase of a financial instrument or commodity in one market and the sale of it simultaneously in another market in order to profit from existing price differentials in both markets. In other word, the arbitrage takes advantage of two different price quotations for the same instrument or commodity in different markets or in the same market as with rights trading. He buys in the market with the lower quotation and sells where it is higher.

 

Ask Price

The lowest price offered for a security on an exchange or over-the-counter market. It denotes the lowest price an investor is willing to sell a security at a particular time. It is also called the offer price.

 

Asset

An item of commercial or exchange value owned by a company, individual, government, etc. It also refers to the culmination of all the items accompany owns — total assets.

 

Asset Diversification

Investment in a variety of financial instruments in order to spread risk

 

Asset Mix

The percentage distribution of assets held by an individual or corporate entity under the various categories of assets such as equities, debt instruments, cash, and short-term instruments.

 

Asset Stripping

The sale of a company’s assets or other component parts (e.g. subsidiaries) bit by bit for profit.

 

Auction Market

A market where orders to buy or sell financial instruments or commodities are effected under given rules. Trade is usually sealed at the highest bid price and the lowest offer price. The auction system in the securities market, however, differs from other forms of auction markets as there are several buyers and sellers represented by their stockbrokers, unlike the latter type of auction where just one seller and several buyers participate.

 

Authorised Share Capital

The permissible number of shares a company may issue as stated in its Memorandum and Articles of Association. The authorised shares are subject to change only by a resolution at a general meeting of shareholders.