Listed Securities Are Traded On Organized Exchanges – Meaning And Examples
The stock exchange market is known for its peculiarity and has some specified instrument used in the day to day activities of the exchange market, and in addition, the establishement of the market was mainly to listed securities are traded on organized exchanges.
The instruments traded are referred to as securities which are traded on the floor of the stock exchange, just like we have it in most stock exchange centre in the world, for example the New York Stock Exchange (NYSE), Nasdaq Stock Market, Shanghai Stock Exchange, London Stock Exchange, Euronext, NSE, ASX etc.
Stock Exchange Market Terminologies
The stock market has some terms used for its activities, these terms makes trading by stock brokers easy, they could be used in describing those list of securities traded in NSE or those list of securities traded on NASDAQ, the essence is for easy communication and the assurance that listed securities are traded on organized exchanges. Adequate knowledge of these terms aid in business, below are few of those terminologies;
Offer by private placement – this statement refers to a limited number of people who are selected through the stock brokers and are invited to subscribe to the issue. This system of selection makes the very few shareholders to have capital required and it enables decision making on the ownership board of a firm easy, the Paris Bourse as well as other stock markets are familiar with this.
Trading Floor – the trading floors of the stock exchange market has different segments. Particular floors in the stock exchange building has structure and are organized for the buying and selling of listed securities, the thing is that listed securities are traded on organized exchanges in order to provide an equal playing ground.
Par value – this is also known as the nominal value assigned to a company’s memorandum as different from the price which was quoted for its on the stock exchange.
A Stock Exchange – this is an organized corporate market where buyers and sellers bid on a competitive terms through a group of people known as the stockbrokers for the listed securities. This corporate exchange center provides the required facilities for the government, firms and institutions obtain new or additional funds to finance their projects and businesses, all these are to ensure that the listed securities are traded on organized exchanges and a fair trading is obtainble.
Bullish, Bull – when prices of securities are on the rising, this is where the stock market is considered to be bullish. Most times some of the major players at the market buy stock with the anticipation of selling the stock at a supposed maximum profit. These players are referred to as s bulls. The opposite of this bullishness is bear. Situation like this comes up whenever, stock prices are dropping, the market will then be bearish.
Bid – Bid just like the term implies talks about the price a broker is willing to buy a security on the behalf of the individual he/she is representing. It is denoted with a plus sign on the daily official list.
Double Option, Put, Call – Call is an option to buy, a put an option to sell and a double an option to sell and buy.
Quotation – This referred to the price a given securities is currently traded on the stock exchange. The quoted prices on each security from day to day depending on buying and selling interest among other consideration.
Volume – Volume is the total amount of shares that has been traded within a given period, either a day, week or a year.
Dealing – dealing is a situation of buying and selling securities on the stock exchange and a deal is struck when a bid matches an offer.
Active Security – When a security has a constant volume of transaction. An active security is always in high demand.
An Offer – When the price of a security has been decided on and the stockbroker is willing to sell on the behalf of his client. An offer is denoted by a minus sign on the daily official list of the stock exchange.
Authorized Share Capital – The number of shares and nominal value of a company’s share capital which is stated in its memorandum and articles of association. A meeting and resolution of shareholders is needed to increase the authorized share capital.
Market Capitalization – the market value of a company’s issued share capital which is calculated by multiplying current quoted price of its shares by the number of shares outstanding.
Issued And Paid Capital – issued capital is that portion of a company’s authorized share capital which has been issued to shareholders, while paid up capital is the part of issued share capital which has been paid for by shareholders.
Stockbroker – The stockbroker is an agent who is trained on the running in the securities market. The stockbroker has the responsibility of buying and selling off of securities on the behalf of the client, at the end of any transaction he get a brokerage fee or commission. The stockbroker must be a member of the countries stock exchange.
Earnings Per share – This is the monetary value of profit after tax of each ordinary share. An earnings per share is gotten when you divide the net income by the number of ordinary shares outstanding. It give an indication of a company’s profitability.
Issuing Houses – Financial agents that assist companies as well as governments in placing new issues on the market and thereby help in raising on new capital through shares, debentures, government bonds etc.. they also advise issuers on how to raise funds at the last cost.
Price Earnings ratio – this is the value of ordinary shares in relation to earnings for a period. It is a good measure of a company’s shares in relation to other equities into the same industry.
Proxy – When a shareholder who is always busy and have little or no time to attend company’s meeting to appoint another person on hi place to vote on his behalf has the proxy rights.
New Issues – New issues referred to as those new securities issued for the first time by corporate firms or government body to the general public or other existing shareholders.
Dividend And Dividend Yield – Dividends referred to the amount given as returns to registered shareholders out of the company’s profit in proportionate to the number of shares held by each shareholder.
Right Issues – these are the shares offered to a company’s existing shareholders in a proportion to the number of shares held and usually at below market price, this is in a bid to make the offer attractive.
Cum Dividend – this indicates “with dividend” meaning the buyer of a security market “cum dividend” is entitled to dividend payments when next due even if he has only held it for a very short time.
A Dividend Warrant –this an order issued to shareholders by a company in which they own shares authorizing the bank to pay the dividend specified on the warrant. Shareholders pay their dividend warrant into bank accounts.
Coupon rate – this is the rate of interest that is paid on stock and bonds.
Script Issues – Script issues do not generate any fund for the company as it merely transfers from reserves to paid up capital, they also known as bond issues.
Offer For Sale – this is an offer to sell existing shares by shareholders to the public in a sale effected through stockbroker.
Offer For Subscription – this is an offer or an invitation by a company to the public to subscribe to new issue. It increases the company’s capital base.
Capital Structure – It are the various part in a company’s long term capital e.g. debenture, ordinary shares etc.
Primary market – The primary market is the market for new issues of securities, this market is also referred to as the issue market.
Secondary Market – This is the market for the buying and selling of outstanding or issued securities.
Growth Stock – this is a situation when the share of a company whose earnings growth is at a fast rate. These are usually priced well above par value investors benefit through capital appreciation.
Premium – This is the positive difference between the current price of a security and the pair value.
Second tier securities market – this market is the market for the listing of small and medium scale enterprises.
Blue Chip – these are some of the most attractive listed securities to investors because they are shares of companies that are well established. They also considered as less risky to invest in.
In conclusion, one can say that the idea for haing a stock a market is to ensure that listed securities are traded on organized exchanges, with stocks sold at fair bids.
Now a telling question people often ask is can listed securities be traded over the counter? This strickly depends on your stock broker or agent who will do the trading on your behalf since there is an equal trading market where listed securities are traded on organized exchanges, however, it mostly depends on the smartness of the broker.