Stock Exchange Dictionary

One company taking control of another by purchasing a majority or all of the target company's outstanding shares. An "unfriendly" or "hostile" acquisition attempt is usually characterized by an offer far in excess of the market value of the shares, which is meant to induce current stockholders into selling. The target company's management may retaliate by soliciting competing offers from other companies in hopes that a bidding war will frighten off the attacker.

In accordance with § 15 of the German stock exchange laws (WphG), a Joint Stock Company is obliged to publish company related news that may influence share value. These publications are called "ad hoc" news.

An adjustment is undertaken in order to correct or count back on a share value prior to a capital increase, dividend distribution, or similar action; the adjustment facilitates a realistic comparison between the new and the previous rates. In charts, such corrections are mentioned separately in the corresponding field.

The admission board processes the admission applications for issuing companies filed by the banks represented on the stock exchange.

There are certain requirements to be filled in order to allow the admission to the stock exchange, for example the publication of the consolidated balance sheets or the Solvency of a person or company. In the so-called Stock Exchange Prospectus, all the information is compiled, and released by the admission office.

Short for: American Depository Receipt ADRs evidence ownership of shares issued by non-US resident companies (foreign-based companies). These are necessary as, unlike in Germany, trading regulations do not permit the direct trading of common or bearer shares in the USA. ADRs (also known as Hinterlegungscheine - deposit receipts) also help to make the trading process quicker, easier and cheaper.

Share index of the Amsterdam Stock Exchange

Term for trading taking place between banks after close of stock exchange business.

AG stands for a German Joint Stock Company, a capital funded company which exists as a legal entity. The shareholders are co-owners of the Share Capital, which has been divided up into shares. The goal of a Joint Stock Company is to accumulate capital for investment and the like by means of share emissions, in order to divide the entrepreneurial risk as much as possible among the shareholders.

Amount by which an instrument sells above par. Also used to describe the difference in value between currencies, or the percentage charged on changing paper money into cash.

(short for: Aktiengesetz = German Stock Corporation Law). The AktG is the legal foundation of a stock corporation. It contains all the major provisions regarding stock corporations and the controlling and decision-making bodies.

Highest (historical) price of a share since its listing.

Lowest (historical) price of a share since its listing.

Negotiable share certificates issued by major US banks, related to non-American shares deposited with them. ADR's are generally issued in a ratio of 1:1 for 100 foreign shares, but they may also be issued for smaller quantities. They are designed to simplify, accelerate and reduce the cost of dealing. Due to specific stock exchange trading regulations, some foreign shares are only traded in this form on the US stock exchanges.

Abbreviation for American Stock Exchange.

Anti-Cyclical as opposed to Pro-Cyclical. Speculation against the current stock market trend is considered anti-cyclical investment behaviour. When prices are falling, stock market experts are more inclined to buy, and sell when rates are rising.

The exclusion of a share from trading is called the appropriation of the marking of share prices. This can occur when changes in the respective stock corporation take place, or when financial difficulties arise. Not to be confused with Exposure of the marking of share prices.

Utilisation of differences in exchange rates of the same shares at different stock markets at the same time. At the Stock Exchange Centre offering lower prices, shares are bought, and then sold immediately at those centres offering a higher rate.

(German: Brief) As an addendum to the share price after the daily quotation, abbreviated to "B" (for "Brief"), it denotes an offer to sell and means that one or several investors wish to sell the paper at the price but have as yet found no buyer. The addendum "bB" ("bezahlt Brief") after the share price means that sales have already taken place but there are still shares to be sold. Opposite: Bid

Assets are set against liabilities in a balance sheet. The asset composition also provides information on how a company's capital is being invested. An excess on the asset side of the balance sheet constitutes the company's profit.

Term used to describe the fact that a security's price is equal to its nominal or face value.

The amount of share capital which a company is permitted to issue. Also called nominal capital. See issued capital, uncalled capital, and paid-up capital.

Term for the average number of shares traded within a specific period of time (usually a trading day)

Comparison of the assets and liabilities of the accounts of a company, based on a bookkeeping exercise. It shows the result of the course of business (profit or loss) in the form of a balance. The principal legal stipulations are incorporated in the HGB German Budgetary Code and the German Balance Sheet Regulations. The balance sheet is an integral part of the annual statement of accounts. Other components include the profit and loss account and the Annex (special explanatory notes).

Evaluation by share specialists about a share's expected future performance. "Balancing" means that the share's fraction of an investor's security portfolio should be equal to the average fraction of other shares. The share's performance will, according to the analyst's opinion, be about the same as the total market performance. Because the price behaviour for the entire share market almost cannot be determined, it is for practical reasons related to a Share Index. In Germany, this is generally the DAX. This share will have approximately the same performance as the DAX.

In a basic analysis, a Joint Stock Company is evaluated with financial key ratios. The most important key ratios are profitability (assets), financing (Cash Flow/interest payable etc.), price-earnings-ratio (see KGV), growth potential, and general cyclical conditions, as well as the fiscal-political framework. This information attempts to predict business activity and its profitability and to derive the potential for appreciation from them.

An investor who acts on the belief that a security or the market is falling or is expected to fall.

Description of marked falls in prices on the stock exchanges. The term is generally used in securities exchanges when the drop in prices extends across the entire gilt-edged market, the entire share market or, at least, major sectors of any of these markets. An above-average fall in the price of individual securities is described as a price collapse. The opposite of a bear market is a bull market.

A share that is not made out in a particular name. Change of ownership can take place by simply handing over the document.

Securities trading in before-hours dealing happens most of the time before the effective dealing starts, without surveillance and over the phone. Before-hours trading also informs about the price trends on the respective day of trading. See also: After-Hours Dealing.

The yardstick that a fund manager compares the performance of their fund to, such as the All Ordinaries index which may be used as a benchmark for Australian Shares.

The lowest quoted offer of all competing market makers to sell a particular stock at any given time.

An indication by an investor, trader, or dealer of a willingness to buy a security, bond, or commodity. The quoted bid is the price at which a Market Maker is willing to buy a security.

This term has become the synonym for a Stock Exchange Crash or any other type of sudden rebound with international impact. It goes back to the panic-stricken security sales of Friday, May 4, 1873. In Germany and other countries, this resulted in a serious recession. Generally, however, when the term "Black Friday" is used, it refers to the day on which a price crash in the U.S. caused the deepest international economic crisis to date.

A security from a well-established, financially-sound and stable company that has demonstrated its ability to pay dividends in both good and bad times.

Generic term for securities where the issuer (obligor) commits to pay a sum of money to and/or render other services for the creditor. Interest rates may be fixed or floating. A bond is issued in a full amount and is sub-divided into installments, partial debentures. Issuers: Public authorities (Government bonds, regional state government bonds etc.) companies (industrial loans) banks (bank bonds, mortgage bonds, municipal bonds) foreign countries (foreign bonds, foreign currency bonds) The term "bond" usually refers to securities with longer maturities.

Bonus is the term used to describe a once-only payment - in addition to the dividend - which is paid to shareholders after particularly successful trading years, when exceptional profits have been earned (e.g. in the case of high book profits due to the sale of property) or on special occasions (such as company anniversaries).

Bonus shares are issued, when a PLC transforms published reserve funds into share capital. The company's capital resources are unaffected; the investor's share in the company remains the same, however, it is divided among a larger amount of shares.

Placement procedure (placement) in which the investors are directly involved in the price calculation process. The overall Subscription wishes (subscription) of the investors, including their price proposals, are electronically recorded, in both quantitative and qualitative terms, by the lead manager in a 'book' at a central point. The information acquired from this book building process is then incorporated in real time into the price fixing and allocation of the shares. Book building is a widely-accepted procedure which is particularly designed to establish a fair balance of interest between the issuer and the investor in relation to the level of the issue price.

A boom is also known as Bull Market. This market situation is characterized by a longer lasting price rise. However, a boom does not mean the exceptional performance by any single instrument. It expresses rather that the entire share market or pension market, or at least relevant sub-sectors, did perform better than expected by the market participants. Opposite: Bear Market.

A sudden and unexpected 'break,' or downward trend, in the exchange value of a certain stock, share, currency, etc.

A sudden, continuous, and strong decline in prices in general is called a break in prices.

It is important to distinguish between the official broker and the independent broker. The latter places securities transactions on the stock exchanges, primarily between the credit institutions represented on the stock exchanges. The independent brokers, who are empowered by the management to participate in stock exchange dealings, also conduct business on their own account. Brokers receive a percentage of the turnover as their fee, Broker's commission.

Investor with an optimistic view of the development of share prices on the stock markets.

The rise in the market price of securities on the stock exchange; synonymous with economic upturn and boom conditions. The general 'rise in prices' usually lasts for some time. Frequently restricted to individual sectors of the securities market. A bull is a market operator who speculates 'on a rising market'. The opposite of a bull market is a bear market.

Combination from the purchase of an option to buy with a lower basic price and the sale of an option to buy with a higher basic price.

French share index containing the 40 strongest shares of the Paris Stock Exchange. French counterpart to the DAX.

The contractual agreement of an interest rate ceiling. If the reference interest rate exceeds the interest rate ceiling, the seller of the cap pays the buyer the difference between the reference interest rate and the interest rate ceiling.

Tax on the profit from the sale of capital assets such as shares or property.

A measure for financing a company by increasing the equity. In the case of a Joint Stock Company the following options exist: Increase in equity by issuing new (Shares Subscription Right) Increase in equity through company assets (Bonus Share) In addition, there is "contingent" capital as a medium of financing by the issuance of Bond with an option on shares or conversion rights (Bond With Warrant, Convertible Bond) as well as "approved" capital. The latter is provision capital in a way, i.e., the Managing Board is entitled by the articles of incorporation to increase the capital up to a certain amount by issuing new shares against investments, without the necessity of a separate decision by the General Meeting of Shareholders.

A long-term investment of money, generating interests or any other earnings or yields, is called a capital investment.

In general, this means the organised capital market (by banks and stock markets); the non-organised capital market is represented by moneylenders, private brokers, etc. It is a market for middle- or long-term capital, such as shares, participations, fixed-interest securities, etc. Its opposite is the Money Market.

Depending on the form of the investment, capital yield can be generated. There are dividends, interest, revenue, and appreciation; if the expenses and fees are higher than the generated yield, it is called a negative capital yield.

Currency, coins, cheques, and balances in bank accounts - a current asset.

A part of the assets of a fund may consist of a bank balance or money market shares in order for the Funds Management to be able to react flexibly to investment opportunities, or to be in the position to offer redemptions at any time. The amount of solvency is contractually defined and may be influenced by the distribution date, share redemption, and general position of the stock market. According to KAGG, a fund may only have a maximum of 49% solvency, except for immediately after floatation.

Also: surplus turnover, financial surplus. The net-intake of liquid assets resulting from turnover-productivities and other activities during a certain period of time is referred to as cash flow. Cash flow represents a very expressive key ratio for the evaluation of a business and to rank its shares. This key ratio is gleaned from the balance sheet of a joint stock company. In Germany, this ratio consists of a compilation of the profit brought forward, dividend yield, appropriations to reserves, and amortisation of fixed assets. Calculation formula for a relative key ratio: Cash flow / Number of Shares. You can find further key ratios under Cash-Flow-Ratio. An absolute figure, describing the money flow to and from a company. When expenses exceed income, the cash-flow will be negative. The cash flow is calculated by summing the adjusted annual net profit and consumption of fixed capital as well as the changes of long-term provisions for losses. Height and trend of a cash flow allow conclusions regarding a company's earning power, ability of self-financing, creditworthiness and its ability to expand.

Cash flow margin-key ratio for the operative profitability of the company. The cash flow margin (cash flow profit margin) indicates the percentage of turnover profits available for investment financing, debt redemption and dividend yield. It serves as a measure of the self-financing capabilities and profitability of the company. In comparison with the net- and gross-turnover profitability, cash flow margin has the advantage that internationally varying directives for the preparation of balance sheets are mostly neutralised.

Cash flow per share is calculated through the division of cash flow by the amount of issued shares. For the past, cash flow per share is gleaned from cash flow calculations on the basis of published company reports, for the future on the basis of estimates by analysts. It serves as a basis for the rate-cash flow ratio.

The cash flow ratio is a profitability key ratio calculated on the basis of actual Cash Flow. It indicates the amount of cash flow per share contained in the share value. Calculation: Cash Flow Ratio = Market Rate / Cash Flow per Share. The 'cash flow per share' is calculated: Cash Flow per Share = Overall Cash Flow of the Business / Amount of Shares.

Cash flow return on investment (CFROI) - Key ratio of a company's capital profitability. The key ratio cash flow-return on investment sets a company's cash flow in relation to its entire capital investments. In comparison with the company's capital profitability, CFROI has the advantage that it neutralises various directives for the preparation of balance sheets because of the benefits of cash flow.

German abbreviation: KCF The cash-flow rate is the ratio of Cash Flow per share and share rate. For the indirect calculation, those profit or loss parameters are considered which result from valuation measures and which do not result in payments during the same period. The cash flow, a liquidity oriented key figure, is used for the valuation of a company's future earning power behaviour compared to various companies. The increasing significance of the cash-flow rate is, i.e., due to the fact that it is significantly less susceptible to balance policy manipulations than the profits stated in the Consolidated Balance Sheet.

Composite DAX. This index contains all shares officially listed in Frankfurt. Each CDAX share is also allocated to a CDAX sector index for the following industries: automotive, banking, chemical, media, industrial production, food, technology, insurance, transport & logistics, machinery, industry, construction, pharmaceutical and healthcare, wholesale, software, telecommunications, energy suppliers, financial service providers, consumer industry.

Central stock exchanges are the respective country's main stock exchanges. In Germany, for example, this is Frankfurt, in the U.S. the "New York Stock Exchange" or the Tokyo stock exchange in Japan.

Part of the so-called technical analysis. Graphic representation of price fluctuations of individual securities or even of trade and stock market indices. The chartist, namely the compiler of the so-called 'technical analysis', makes use of past price curves in order to produce a price forecast based on specific, typical, recurrent situations.

A chart analysis is the scrutiny and prognosis of the exchange rate and Yield development of shares. Procedures used in chart analysis (share analysis) are: Fundamental analysis: review balance sheet data and profitability for a company, drawing conclusions regarding its chances in view of the exchange rate and yield of the shares. Technical or chart analysis: A prognosis regarding the future development of a company or share is developed on the basis of its exchange rate and turnover development to date, which mirror investor behaviour in the past.

Contract awarded, without limit, for the purchase of securities at the most favourable price. The opposite of the cheapest offer is the best offer.

The end of a trading session. The closing price is what's quoted in the newspaper. In real estate, finalizing the sale of a property.

A closed fund is an Investment Fund that temporarily issues shares until a given circulation volume is reached, but does not redeem them. The shares continue to be traded on the market. Opposite: Open Funds.

The closing price is established according to the acoustic code which signifies the end of attendance dealing. Claims for consideration in price fixing only apply to orders which have been received by the official broker by this time and which are suitable for continuous trading (variable quotation).

Term describing the payment received by the shareholder of a stock corporation in the event of a merger with another company. This payment can take the form of cash or shares.

Where securities are concerned, the term refers to certain characteristics of the instrument, such as: interest rate, issuance rate, term, redemption, etc. (bond conditions).

General.: temporary association of companies to resolve large financing issues and spread the risk at the same time. In the case of new issues: the best example of a bank consortium (also syndicate) is one led by a leading institution, the lead bank, for the placement of new shares.

Type of price setting for certain securities, also called variable price. For shares that regularly have a high turnover, prices can be determined at any time during exchange hours. Each paper can be quoted several times on a trading day. At the beginning of official trading hours starting prices are set, and towards the end of trading closing prices.

Tax on the earnings of corporations and associations of individuals. It includes incorporated companies, trading cooperatives and industrial cooperatives and other corporate bodies governed by private law. joint-stock companies (as corporate enterprises) pay the tax on their profits. In this way, each dividend already incorporates a tax component, which the shareholder can set off against his own tax liability; in certain cases, it may even be refunded. The shareholders therefore receive, in addition, a tax credit equivalent to three-sevenths (42.86 %) of the cash dividend as 'quantifiable corporation tax'.

The coefficient of correlation - a technical share key figure. The correlation measures the relation between 2 variables, for example between two shares or a share and an index. (or in regard to the sector). The coefficient of correlation indicates, if there is a relation between the price performance of the two variables. The coefficient of correlation may vary between +1 (completely synchronised) and -1 (completely reciprocal). A coefficient of correlation of 0 means that there exists absolutely no correlation between the two variable's price performances. The coefficient of correlation is calculated for a period of 30 and 250 days.The correlation takes an important part in the portfolio composition, because the so-called unsystematic risk can almost completely be eliminated by the distribution of assets in shares with a small correlation and, as a consequence, the risk can be reduced.

In investment plans with regular payments, the investor buys more shares when the rates fall, and less when the rate rises. Regular payments of an equal amount over a long period of time mean for the investor a lower average share price. It also has the virtue that fractional shares may be added to the investor's portfolio, not being obliged to buy entire shares.

Cost income ratio - profitability measure for banks The cost income ratio is a key ratio for the operative expenditure-profitability ratio for banks. Here, the management expenditure (minus appropriation of risk provisioning) is put into relation with the profitability numbers of the bank's business year. Among the significant profitability numbers for a bank are interest surplus, fee surplus and trade result. Through the cost income ratio a quantitative expression of the enterprise's efficiency is gleaned. The rule is the lower the cost income ratio, the more efficiently the bank is managed.

The coupon refers to the ticket or warrant, which guarantees the right to receive matured interests or dividends. A large number of coupons are also referred to as a Sheet.

Term for a sudden huge fall in all prices at one or several stock exchanges. The most famous stock market crashes are that of 1929 (Black Friday), the lasting damaging effects of which were felt worldwide, and the one in 1987.

Proceeds from the sale of an object, such as a house, which can be generated under normal circumstances. In addition to the earning-capacity value,it is an important starting point for the financing, valuation and hypothecary value of buildings.

Bank authorized to manage securities accounts for its customers.

Shares of companies whose turnover and profit performance largely depends on economic trends.

Abbreviation for Deutsches Aktieninstitut (German Share Institution)

German abbreviation for Deutscher Aktienindex (German Share Index)

German share index of the 100 largest and top-selling shares in Germany. The DAX 100 comprises the DAX and the MDAX. The shares included in the DAX 100 are sub-divided into sector indices (Automotive & Transport, Banks & Financial Services, Construction).

Any order to buy or sell a security that automatically expires if not executed on the day the order is placed.

A trader who trades for small, short-term profits during the course of a trading session, rarely carrying a position overnight.

The shareholder, according to the corporate income tax reform which came into force on January 1, 1977, has the right to have the Corporate Tax 3/7 = 42,86 % of the dividend, which accrues from the Dividend deducted wholly from his income tax. In the case of the shareholder not being liable for income tax, or his tax liability being less than the to be accredited amount, then the corporate tax will be paid out to him wholly, or in part.

The debt-equity ratio - a balance sheet key figure A company's debt-equity ratio is calculated by comparing the borrowed capital to the equity. As a principle, the higher a company's debt-equity ratio, the more the company depends on external creditors. If the so called leverage effect is taken into consideration when evaluating a company's debt-equity ratio or equity quota, it can happen that, for profitability considerations and under certain conditions, a higher debt-equity or a lower equity ratio can get better evaluations. As a consequence, the key figures Debt-equity ratio and Equity must never be looked at separately, but rather in relation to the company's profitability. In general it can be said that a higher yield risk caused by higher equity should be taken into consideration, because a company's financial stability is stronger with high equity.

One of the bank transactions rooted in the credit system is the depot business. In this case, securities are not given to the bank for safekeeping, but rather for redemption of interest or dividend papers, the execution of voting rights, ensuring subscription rights, etc.

Securities may be deposited at credit institutions for safekeeping and management. Each customer receives a separate depot (the opposite of an account), from which the types, nominal values or number of units, or numbers, etc., of deposited securities as well as name and address of the depositor must be clearly derivable.

Financial instrument whose value is based on another instrument, such as a stock, an index, etc.

Private enterprise company, formed in 1992, with its head office in Frankfurt am Main. The Deutsche Börse AG incorporates the Deutsche Börse Clearing AG, the Deutsche Börse Systems AG, the Fördergesellschaft für Börsen und Finanzmärkte in Mittel- und Osteuropa mbH (FBF), the European Exchange (Eurex). Deutsche Börse AG operates the Frankfurter Wertpapierbörse (FWB) as well as the trading platforms of the stock exchanges in Dublin Vienna.

Institute for the promotion of share culture in Germany, with headquarters in Frankfurt. The goal of the association is the promotion of the share per se as a way of financing companies and for a better distribution of wealth.

Securities service operated by a direct bank without individual investment advice. Of interest, since it offers a cost-effective alternative for the investor who already has experience in the securities business.

The amount of balance sheet profit of a joint-stock company allocated to each share. The dividend is expressed either as a percentage of the face value or in units of currency per item. The stockholders meeting decides how the dividend is to be distributed. In Germany, the dividend is paid annually, while in the USA and other countries it is usually paid every quarter (quarterly dividend).

The annual dividend shown as a percentage of the last sale price for the shares. A simplified rate of return on an investment.

Abbreviation for Dow Jones Industrial Average containing the 30 largest companies in the US economy, the so-called Blue-Chips.

Before the turn of the century, the publishers Dow Jones & Co. published indices on behalf of the New York Stock Exchange relating to 30 industrial shares, 20 railway company shares, 15 power company shares and an overall index of all 65 company shares. Due to its rapid circulation, the industrial index, in particular, attracted worldwide attention and became generally known as the 'Dow Jones Index'. The indices issued by Standard & Poor (500 company shares) and the New York Stock Exchange are more comprehensive. The Tokyo stock exchange also issues an index of 225 Japanese company shares.

Cooperation between Deutsche Börse, Dow Jones, SBF - Bourse de Paris and Schweizer Börse aimed at establishing an European Index family Dow Jones STOXX. It consists of a benchmark index, a blue-chip index and 19 sector indices for pan-Europe (Europe) and for the member states of European economic and monetary union (euro zone).

Restriction on trading at the New York Stock Exchange. This comes into effect as soon as the Dow Jones falls by a specific number of percentage points within a short, pre-defined period of time. It was introduced to prevent a snowball effect from computer-based stop loss sales.

Short for: Deutsches Zertifikat (German Certificate)

Date on which a debt should be settled.

Method of determining profits, used by the 'Deutsche Vereinigung für Finanzanalyse und Anlageberatung e.V.' the German Federation for Financial Analysis and Investment Advice, an association of banking and economic experts. The DVFA has concentrated on share analysis and has developed a formula which reflects the annual profit of a business enterprise solely on the basis of the object of the business, adjusted to take account of special influences; usually referred to as 'result per share as defined by the DVFA'. It can be used to calculate the market price/profit ratio. Nowadays, all major joint-stock companies publish their DVFA results on the basis of this system. It facilitates comparisons between companies and types of business.

The dynamic debt-equity ratio - a balance sheet key figure The dynamic debt-equity rate is calculated by dividing the company's current debt rate by the cash flow during the past business year. The dynamic debt-equity ratio is considered as a complementary key figure for the evaluation of a company's capability for debt redemption. It has a dynamic character, because for the calculation of this key figure a time related factor (cash flow) is involved, contrary to the calculation of the debt-equity ratio. The cash flow, the dynamic debt-equity ratio's denominator, indicates what funds a company had generated during the past period during the turnover process, i.e., the available amount of those funds. The dynamic debt-equity ratio indicates, therefore, how many years would be necessary for a company, with all the other conditions remaining stable, to entirely redeem its real debts using its the cash flow. As a principle, it can be said that the lower this key figure's value is, the faster a company can redeem its debts using its own funds generated through the turnover process. Therefore, a company with a low dynamic debt-equity ratio is relatively less dependent on its creditors. A lower dynamic debt-equity ratio value can be taken as a positive sign of a company's financial stability.

This term is synonymous with income.

Returns on sales within less than one year's time (Speculative Period) are liable for taxation. If securities are held for a time period of more than one year, the resulting return is tax exempt. Losses within the speculative period can offset the speculation gains.

Key figure determined according to IAS which expresses a company's net income after tax (including minority interests in profit) in relation to the average number of ordinary shares. Apart from basic earnings per share, diluted earnings per share must also be shown if Subscription rights granted have led or could lead to an increase in the total number of shares (dilution).

The key ratio earnings yield, or share earnings yield, puts the net result per share into relation with the exchange rate for a given business year.

Short for: Earnings Before Interest and Taxes.

Short for: Earnings Before Interests, Taxes, Depreciation and Amortization. EBITDA is an absolute earnings indicator of a company providing an assessment of the earnings capacity of a company's operating business regardless of its financing structure. It therefore allows the international comparison of companies with different legal forms.

In the computer exchange the exchange participants are no longer physically present at the exchange, but participate in the trading via computer screens. Among the most famous computer exchanges are the NASDAQ and the DTB for futures trading.

Automated trading system where orders are entered via user terminals and executed automatically.

Stock markets in newly industrializing countries are called emerging markets. The umbrella term emerging markets covers around 40 countries in Latin America, Southeast Asia and Europe that developing into industrialized countries.

Joint stock companies often offer shares to their employees. The purchase price lies typically below the current exchange value. Employees' shares offer the same rights as other shares. In order to take advantage of the inherent tax advantages, these shares may not be sold before a particular retention period has expired.

The end of the day at the stock exchange is referred to as the end of trading. It also stands for the minimum amount of a transaction.

English for an interest in a company (particularly shares).

These are funds that, as well as securities, can also acquire dormant equity holdings in non-listed companies resident in the Federal Republic of Germany pursuant to KKAG (the law governing German investment trusts).

Clearing system (Clearing), set up in 1968 by the Morgan Guaranty Trust Co. in Brussels, for international securities transactions. With over 2,700 associates in 70 counties and more than 60,000 listed securities (in 1994), Euroclear is the largest clearing system in the world for international securities.

As a team, the concern Dow Jones, the German Exchange, the Swiss Exchange and the Paris Exchange have conceived of a number of indexes that serve as a benchmark for Europe's stock markets. In February of 1998, the new group of indexes, 'EuroStoxx', was introduced. Due to the monetary union of 11 European countries that went into effect as of 1/1/1999, all share prices began trading in Euro(s) as of 1/4/1999 in participating member countries. This substantially simplified direct comparisons of companies within the EURO area. The most important index for 'Euroland' is the Dow Jones EuroStoxx 50. It contains the shares of 50 companies from the Euro countries. The individual shares are selected according to the criteria stock exchange capitalization, stock exchange turnover, and industry sector.

Stock exchange

Official list of market prices published by the stock exchange authorities (in the official market report). The exchange list contains the prices set by the Official Trading and the Regulated Market as well as the prices ascertained during Unofficial Market and the prices of any other unlisted securities placed by the banks.

The specified price on an option contract at which the contract may be exercised, whereby a call option buyer can buy the underlying and a put option buyer can sell the underlying.

In the 'explanatory notes' one has the opportunity to look up background information and more in-depth analyses of investment recommendations. They take into account market information on the strike value as well as the most up-to-date key ratios of the share option at hand at the time of the investment recommendation, so that the reasoning behind a recommendation may be easily understood.

A stay in a Marking (of Shares) is a pause for the share to be traded for a limited period of time, if a sudden event causes or may cause an above average fluctuation in the exchange rate. This stay is for the protection of the investor.

In the case of fixed-interest securities, the face value is the interest-bearing outstanding sum and, in the case of shares, the proportional amount (par value) of the nominal capital indicated on the share certificate. According to German company law, the lowest face value amounts to Euro 1.

Placement procedure (placement) in which the selling price of the shares is established at the beginning of the selling period. The price is based upon an in-depth analysis and evaluation of the company, with simultaneous consideration of the stock market valuation of comparable companies and the general state of the market.

Calculation and quotation of stock exchange or market prices; price fixing, stock exchange quotation.

1. Term for a lower limit for an interest rate. An interest rate option is concluded for securities with floating interest rates. In this way the investor secures a minimum return in the amount of the exercise price of the floor less the premium payment for the option. 2. The trading floor of the stock exchange or the place in the stock exchange where trading activities take place.

Floor-trading system dealing takes place on the floor of the exchange and is called in short floor trading. Only permitted stock exchange members have access to it. Visitors who wish to gain an insight into the Frankfurt exchange can view proceedings from the gallery of the exchange floor. However, with the introduction of the Xetra computerized trading system, the years of floor dealing would seem to be numbered.

A market in which supply and demand are freely expressed in terms of price. Contrasts with a controlled market in which supply, demand and price may all be regulated.

Free float describes the number of shares of a 'public limited company' which are not in permanent possession, measured against the total number of shares issued.

Free traders deal in all securities; they may also conduct business in officially traded securities, but may not fix exchange rates. However, they regularly publicise prices on the Regulated Market as well as the Free Market. Free traders are admitted to the stock exchange by its managing board.

Time period during which a security cannot be sold.

The individual or organisation in charge of investing funds on behalf of a financial institution.

Also: Funds boutique. 'Funds shops' offer a more or less broad variety of funds of different Portfolio Companies. They are still a relatively new alternative for the distribution for investment products. They are also an increasingly more significant element of bank-independent consulting.

Securities are consumable, when they can be interchanged among themselves without marring the creditor. The shares have to be of equal value and equal sort; consumible securities are Bearer Instruments or also Registered Shares with blank endorsement.

Agreement to sell or buy a specific amount of a commodity or financial instrument at a particular price on a stipulated future date.

Abbreviation for Frankfurt Securities Exchange. The FWB undertakes transactions in the trade of securities, currencies of all denominations, billings, and precious metals.

There was demand for the securities at the quoted price, but there was little or no supply available. No trades were undertaken. Price Supplements for officially published quotes on the exchange list.

Clearing house member who is entitled to clear its own transactions, those of its customers and those of floor brokers whom it sponsors.

The meeting of all of a Joint Stock Company's shareholders is called a general meeting of shareholders (German abbreviation HV). Important, fundamental steps for the company's future are discussed. For example: the use of the balance sheet profit, re-election of the supervisory board or a joint stock company's closure.

Highly speculative shares are called 'glamour stocks' (US expression).

Conversion of a partnership into a joint-stock company, with simultaneous introduction of the shares onto the stock exchange or listing of the shares in an AG which were not previously listed on a stock exchange. Apart from access to the capital market as a source of finance, the principal reasons for a company being listed on the stock exchange are the publicity and image effects, as well as fiscal considerations.

Buy or sell order which remains in force until executed or cancelled by the customer.

Order type in the Xetra system. Order valid until the date specified.

Option that allows the underwriter for a new issue to buy and resell additional shares.

Operational profitability key figure gross profit-turnover ratio (the gross profit margin) is calculated by the percentage relationship of annual profit, adjusted by taking into consideration extraordinary events, to turnover. Therefore, the gross profit-turnover ratio is a key figure describing a company's operational earning power. Companies with rapidly growing turnover but declining turnover profitability are frequent. Contrary to these, there are companies with declining turnovers but growing margins. This can be partly explained by, for example, the sale or closing down of unprofitable production sectors. That's why turnover changes will not necessarily cause changes in the respective return.

Also: plough-back fund. Fund whose aim is the long-term growth of its assets. A growth fund reinvests (ploughs back) profits realized.

Term for shares in a company or in an entire segment that show an above-average potential.

Shares of a company known for a history of rapid earnings growth. Most growth stocks do not pay dividends because management reinvests earnings to feed the growth.

Implement a strategy to offset investment risk.

Investment Trusts without any legal or other constraints on their investment policy. Their aim is a growth in capital in as little time as possible by means of investing in a full range of investment types. Hedge Funds offer the chance of a very high yield, but also the correlated risk of a loss of capital.

In the case of options or futures the hedge ratio indicates how many options or futures must be bought or sold to fully price alterations in the price of the base value to be protected.

The highest price of a security within a certain period of time, e.g. daily high, monthly high, yearly high etc.

A term for securities that have performed remarkably or are expected to perform very well in the future.

The variance or standard deviation of the change in the underlying stock price for a designated period of time.

An umbrella company that does not produce any goods or provide any services itself, but manages the companies in which it has an interest.

The economic environment at the company's headquarter location is called the home market.

Options stategy where one or more contracts of a given class with different expiration dates but the same strike price are either bought or written.

Describes an interested party's initially unofficial purchase intention. The prospective buyer tries to buy up a majority of shares of a company in order to gain a majority of votes. Hostile takeovers are often conducted when a Joint Stock Company is undervalued on the exchange.

Abbreviation for Hauptversammlung (Shareholders' Meeting)

Abbreviation for International Depositary Receipt

Addendum for an order in the XETRA electronic trading system. The order must be completely or partly executed as soon as it is on the market. Parts of the order that could not be carried out are countermanded.

Measurement for the expected price fluctuation in the underlying, calculated based on the current market prices and not on historical underlying price fluctuations.

Cum is Latin for "with"; referring to securities with interest, dividend, or other talons. Opposite: negative dividend - (Ex Dividend).

Instrument, based on statistics, for graphically representing the fluctuations in price and volume of commodities and securities (share index) over a specific period of time. This is usually achieved by converting the values under consideration into a percentage or relative basic parameter set at 100 %.

Shares issued by all the different industrial companies are called industrial shares, contrary to bank, transportation and insurance shares. They represent the majority of the shares listed on the stock exchanges.

In particular: initial utilisation of the domestic share market in the wake of an increase in share capital or reallocation, i.e. shares in a company are offered for the first time for purchase by interested investors. With an IPO, in general, a stock exchange admission of the share capital is associated with adoption of the stock exchange quotation. From the company's standpoint, an IPO signifies the acquisition of risk capital from outside by using the share as a financing instrument.

An insider is anyone who, as a member of the management or of the supervisory board, on the basis of his participation or on the basis of his profession, becomes aware of unpublished facts which could have a significant effect on market prices (§ 13 of the WphG Securities Trading Act). An insider is not allowed to buy or sell insider securities, either on his own behalf or on behalf of others. Moreover, he may not divulge insider facts to any other person or recommend a third party to buy or sell insider securities (§ 14 of the WpHG). Failure to comply with the bans may result in criminal proceedings against the insider.

Transactions of persons trading on the stock market using information that has not yet been made public and therefore exploiting their advance information. This incurs a prison sentence of up to 2 years or a fine of up to 360 days salary.

Insolvency is a continuous inability of a company to pay its debts. Companies are declared insolvent due to their inability to pay their debts or their overindebtedness. The administration of the insolvent company�s assets may be carried out by means of court bankruptcy or settlement proceedings and also out-of-court settlements.

When a dividend is paid more than once a year, dividends other than the final one are called interim dividends. Typically, dividends are paid twice a year, one interim and one final dividend.

Temporary ownership of a certificate of securities before the definitive issuance; e.g., issued on the foundation of a joint stock company.

First price of a share determined by the stock exchange.

The first Official Market Rate, rate of securities/shares on the exchange.

An asset acquired for the purpose of producing income and/or capital gains for its owner.

A company's policy regarding issues and information to maintain their image.

Abbreviation for International Primary Market Association

An issue of securities.

The issue date of a share option gives the date of the official announcement of a new issue by the issuer. The actual issue date may occur after this date.

The price at which investment companies in Germany sell their investment fund share certificates. The issue price is the redemption price (share price) plus, as a general rule, an issue surcharge.

German abbreviation for Kapitalanlagegesellschaft (Investment trust)

Short for: Cash Flow Rate

The KCV (course cash-flow relation) describes the relation of the course of a share to the cash-flow per share.

Collective term for the discount rate and lombard rate. Key rates are used by the Central Bank (ECB) for regulating the money and credit supply of the economy in question. They affect the interest rate level in the money market.

A quotation information service system registering and transmitting real-time quotations on the Frankfurt stock market.

Share certificates are printed in landscape A4 format, in accordance with the guidelines for the printing of securities. The only exceptions are preference share certificates which are printed in a portrait format.

Securities with a Face Value of over 500 EUR are generally referred to as 'large denominations'.

Also referred to as the consortium manager. In close contact with the issuer, he manages the consortium and assumes responsibility for all the centralised operations associated with the flotation, such as preparation of the prospectus, submission of the application for admission to the stock exchange (Admission), market support, etc.

The coupon sheet is an attachment to the security document Sheet. The main portion of the security document is called the Bond/Share Certificate (Without Coupon Sheet And Talon).

Assets of the Funds minus Cash Reserve, i.e. the share of a fund's assets invested in securities, property or derivates. At any time, a fund must be invested with at least 51 percent of its assets.

Liabilities are future sacrifices of economic benefits stemming from present legal, equitable, or constructive obligations of an entity to transfer assets or provide services to other entities in the future as a result of past transactions or events affecting the entity.

Upward or downward price limitation for stock exchange orders. If the price exceeds the limit (purchase order) or if the price is lower than the limit (selling order), the respective orders are not executed.

Order specifying a price limit. A limit (or stop) purchase order must be executed at the price limit or at a lower price. A limit selling order must be carried out at the price limit or at a higher price. There are, further, limitations on how an order is to be valid (time limit).

The listing of securities for official trading takes the form of an application for admission to the admission board. The application contains all the information relating to the securities (amount, type, quantity, dates of maturity) and is made public by means of: - display in the dealing room - publication in the respective official house gazette - publication in the Federal Gazette. A stock exchange prospectus, with full information to facilitate assessment of the security, must be published before each issue of a security.

The lombard rate used to be one of the German key rates. It was the interest rate that the Federal Bank charged banks for pledging securities (lombard credit) and hence set the conditions under which banks were able to procure liquidity. With the advent of European Economic and Monetary Union (EEMU), monetary sovereignty has been handed over to the European Central Bank (ECB). The lombard rate has been very largely replaced by the marginal lending facility.

An investor who has purchased securities is described as long. Opposite: short.

Difference between the nominal amount of a debt or of a loan and the amount of the loan actually paid to the borrower. The effective interest rate is calculated by reference to the nominal interest on the lower amount paid out.

It means the lowest price (daily, weekly, monthly, historically etc.). The opposite of High.

German abbreviation for Landeszentralbank (Federal State Central Bank)

A shareholder who owns a large number of a company's shares is called a chief shareholder. Chief shareholders are usually involved in various companies, and may also hold a position on the supervisory board as well as have significant influence in the company. Opposite: Minority Share Holder.

Term for the difference between prices paid and market rates in securities business. The price difference in the case of arbitrage transactions. An interest margin is the difference between interest received in lending business and interest paid in deposit business. In the case of futures, the margin is the amount that is to be provided as collateral in the form of money or securities. For futures positions and short positions in options: the security to be deposited with the clearing office. The margin can be provided in cash or in the form of securities (shares and securities eligible as collateral) (initial and variation margin).

Market capitalisation gives the current market value of a company. It is calculated from the total number of shares in circulation multiplied by the latest price of the share. This key figure is interesting, for example, in the case of speculations about the possible takeover of a joint stock corporation because the market capitalization indicates the minimum amount that the acquiring company will have to raise.

Security whose price movement is above the market average.

Security whose price movement is on a par with the market average.

Security whose price movement is below the market average.

The price paid at the stock exchange for securities or foreign currency. In the case of percentage quotations, the market price is calculated by multiplying the nominal sum by the market price and dividing by 100.

The marking of prices for shares officially admitted to official trading is executed during the trading hours by the so-called official Broker and published in the stock exchange's exchange list as well as in the daily press. The price is fixed every trading day by stock exchange brokers with the collaboration of the stock exchange managing board. The offer and demand ratio is applied.

Shareholders with a large number of shares have a high level of voting rights. A stock corporation's statutes may limit this to a "maximum voting right" of the voting capital.

Share index representing the 70 most important German shares after the 30 DAX shares. MDAX and DAX together form the DAX 100.

A single shareholder (also small shareholders) or a consistently acting group of shareholders holding a minor share of a company's share capital are called minority shareholders. Due to the small number of shares they are holding they are protected against discrimination by the so-called "controlling shareholder" (holding more than 50% ot the share capital).

A Price Supplement used at the German Stock Exchange, indicating that a major disagio (price loss) is assumed. The minus announcement is issued by the official exchange broker following determined rules. Opposite: Plus Announcement.

A ratio for evaluating the trend in stock prices. The Momentum is calculated from the prevailing price divided by the price n days ago. Momentum is computed for 12, 20, 30, 50 and 250 days. The results are continuously quoted and give rise to a momentum graph that shows the strength of a price trend. The graph describes a course around a zero point (usually diagrammed as 100 percent). If the graph rises above the zero line, this is a signal to buy.

The market for short-term money transactions between the credit institutions and the Bundesbank. For this type of transaction, the Bundesbank issues money market securities. In addition, in the broadest sense, money market transactions include the rediscounting of bills of exchange and all collateral transactions. Sales between banks regularly include daily, monthly, three-monthly or annual transactions. The discount rate and the lombard rate are important pointers to interest rates on the money market.

The market for short-term money transactions between the credit institutions and the Bundesbank. For this type of transaction, the Bundesbank issues money market securities. In addition, in the broadest sense, money market transactions include the rediscounting of bills of exchange and all collateral transactions. Sales between banks regularly include daily, monthly, three-monthly or annual transactions. The discount rate and the lombard rate are important pointers to interest rates on the money market.

Moving averages are calculated as the arithmetic average from a certain number of historic prices. It is calculated for 5, 38, 100, and 250 days. Using the mean of the relative strength levy, a key figure results that describes the ratio of the current rate to the moving average.

A portfolio of stocks, bonds, or other securities administered by a team of one or more managers from an investment company who make buy and sell decisions on component securities. Capital is contributed by smaller investors who buy shares in the mutual fund rather than the individual stocks and bonds in its portfolio. The return on the fund"s holdings is distributed back to its contributors, or shareholders, minus various fees and commissions. This system allows small investors to participate in the reduced risk of a large and diverse portfolio that they could not otherwise build themselves. They also have the benefit of professional managers overseeing their money who have the time and expertise to analyze and pick securities. There are two types of mutual funds, open and closed-ended. Shares in closed-end funds, some of which are listed on the New York Stock Exchange, are readily transferable in the open market and are bought and sold, like other stock. These funds do not accept new contributions from investors, but only reinvest the return on the existing portfolio. Open-end funds sell their own new shares to investors, stand ready to buy back their old shares, and are not listed on exchanges. Open-end funds are so called because their capitalization is not fixed; they issue more shares as people want them. Many open-ended funds allow contributors extra perks, such as the ability to write checks with their portion.

Sometimes called an uncovered option, a naked option is one whose seller does not maintain an equivalent position in the underlying security. For example, the owner of a call has the option to buy the underlying stock from the writer of the call. However, if the writer does not own that stock the option is naked. When the holder decides to exercise his option, the writer will be forced to buy the stock on the open market, and then resell it at the lower strike price. This will result in a loss for the writer. For obvious reasons, writing naked options is risky and must be done in a margin account.

A market is narrow when a large portion of shares is firmly held and not available for trade. A comparatively small amount of shares takes on greater importance, so that even small purchases and sales can lead to large rate fluctuations.

An automatic information network that provides brokers and dealers with price quotations on securities traded over-the-counter.

The term "Net Asked" expresses that there is only demand (but no offer) for a particular security.

The term "Net Bid" expresses that there is only offer (but no demand) for a particular security.

Established on March 10, 1997, the Neuer Markt represents a new trading segment on the Frankfurt stock exchange, providing growth-oriented and innovative companies with new means of raising capital. Among its chief features is the high degree of transparency companies offer investors in this market. The Neuer Markt is moreover characterized by active marketing measures on the part of Deutsche Börse, its liquidity and Europe-wide network. Issuers on the Neuer Markt are SMEs (small and medium-sized enterprises), innovative high-growth companies operating in trendsetting or traditional industries which launch innovative products, processes or services. These firms generally have a strong international orientation and are keen to pursue an active 'Investor relations policy'.

A stock or bond sold by a corporation for the first time. Proceeds may be used to retire outstanding securities of the company, for new plants or equipment, for additional working capital, or to acquire a public ownership interest in the company for private owners.

Founded in 1792, it is the world's most significant stock exchange. Shares in more than 1,700 of the largest US joint-stock companies are traded on the NYSE.

Important share index for the Tokyo Stock Exchange including 225 titles.

Appointed on the recommendation of the management of the competent supervisory authority for stock markets and exchanges. Since he is required to determine official market prices, he is sworn to impartiality. The Stock Exchange Act stipulates that the official broker should not conduct business on his own behalf in securities for which he has set the official market price. He is entitled to a remuneration and, for his services, the official broker receives a commission; broker's commission.

Official trading is the quotation at which shares are admitted to the Official Share Market. For a share to be admitted to the official share market, certain conditions must be met, for example, the publication of a prospectus and a balance sheet. Brokers fix the share prices during trading hours, and the rates are published in the exchange's Market Report and also in the daily press.

The market report is the official publication of fixed rates on every trading day. It is the stock exchange's official publication medium.

Term for the stock market tier where securities listed for official trading are traded. Official trading therefore differs from over-the-counter trading and the regulated market and approximately 90% of all German securities transactions are concluded by means of official trading. Securities in this stock market tier are subject to the strictest listing requirements and prices are determined by official public brokers.

International financial centres with particularly favourable local characteristics, especially in terms of taxation policy and/or legal supervision.

Term for the official opening price at the start of the trading day.

A Trading Order which is still open, i.e. has not been executed, is called an Open Order.

The term Open Position describes Options or Futures, but also, e.g., Short Sale of shares that have not yet matured but for which the holder has a right of exercise of some sort.

First price determined after start of trading. Investors that have placed a market order therefore buy the securities at precisely this price and are not able to influence this. The previous day's after-hours trading often plays a crucial role in determining the opening price.

An order is an intent to buy or sell a security.

An outperformer is a share (fund) that has a better price movement than another share (fund) or an index.

Short: OTC Financial instruments not traded on the stock exchange.