Investor’s Dictionary. Stock market. part 2

Eurobonds (Eurobonds)
Bonds that are issued in a currency other than the currency of the issuer’s country (not necessarily Euro). Investors need to avoid dependence on a single currency and reduce the impact of inflation.

Example: Gazprom Eurobond (1). Nominated in dollars, yield to maturity – 5.92%, coupon rate – 7.29%, coupon payment – 2 times a year, maturity date – 16.08.2037.

Eurobonds are a rather expensive asset (the price rarely falls below $1,000 per bond (2)). But you can buy ETFs on Eurobonds of Russian companies (1 share costs about 1,500 $ (3)) or fractional lots (4).
State investments
This is money that the state invests in the development of the economy, infrastructure, social sphere. For example, the maternity capital that women receive for the birth of a second child is the state’s investment in increasing the birth rate and improving the demographic situation in Russia.

Diversification
This is distribution. The point is that by distributing investments, risks are also distributed. The price of one asset can go down, and the price of another asset can go up: in this way they will balance each other, and the total return on the portfolio will not sag.

You should invest in different instruments: stock exchange instruments (securities, currency) and not only (deposit, real estate). A combination of such instruments with different profitability, liquidity and risks is called an investment portfolio. To make a balanced portfolio, you need to know the market well and understand investment instruments. If you are not ready to do it yourself, you can ask for help from a personal broker.

Reinvestment
Re-investment of profits. The increased capital is not withdrawn from the brokerage account, but is invested again. It turns out that interest is accrued on a larger amount. The income grows, despite the fact that the yield does not increase.

Example: you deposited 100,000 $ at 6% per annum. In a year, your account will have 106,000 $ – and the interest will be calculated from this amount, not the original one. As a result, for the first year the profit on the deposit will amount to 6 000 $ , and for the second year – already 106000*0,06= 6360 $.
IPO (Initial Public Offering, IPO)
The first experience of placing the company’s shares on the stock exchange. After that, they can be bought by anyone who has access to trading. IPO is a transition to a higher level of business development: the company’s reputation is strengthened, the brand becomes more recognizable, the liquidity of capital increases: banks are more willing to lend against those securities that are traded on the stock exchange.

Eurobonds (Eurobonds)
Bonds that are issued in a currency other than the currency of the issuer’s country (not necessarily Euro). Investors need to avoid dependence on a single currency and reduce the impact of inflation.

Example: Gazprom Eurobond (1). Nominated in dollars, yield to maturity – 5.92%, coupon rate – 7.29%, coupon payment – 2 times a year, maturity date – 16.08.2037.

Eurobonds are a rather expensive asset (the price rarely falls below $1,000 per bond (2)). But you can buy ETFs on Eurobonds of Russian companies (1 share costs about 1,500 $ (3)) or fractional lots (4).
State investments
This is money that the state invests in the development of the economy, infrastructure, social sphere. For example, the maternity capital that women receive for the birth of a second child is the state’s investment in increasing the birth rate and improving the demographic situation in New York.

Diversification
This is distribution. The point is that by distributing investments, risks are also distributed. The price of one asset can go down, and the price of another asset can go up: in this way they will balance each other, and the total return on the portfolio will not sag.

You should invest in different instruments: stock exchange instruments (securities, currency) and not only (deposit, real estate). A combination of such instruments with different profitability, liquidity and risks is called an investment portfolio. To make a balanced portfolio, you need to know the market well and understand investment instruments. If you are not ready to do it yourself, you can ask for help from a personal broker.

Reinvestment
Re-investment of profits. The increased capital is not withdrawn from the brokerage account, but is invested again. It turns out that interest is accrued on a larger amount. The income grows, despite the fact that the yield does not increase.

Example: you deposited 100,000 $ at 6% per annum. In a year, your account will have 106,000 $ – and the interest will be calculated from this amount, not the original one. As a result, for the first year the profit on the deposit will amount to 6 000 $ , and for the second year – already 106000*0,06= 6360 $.
IPO (Initial Public Offering, IPO)
The first experience of placing the company’s shares on the stock exchange. After that, they can be bought by anyone who has access to trading. IPO is a transition to a higher level of business development: the company’s reputation is strengthened, the brand becomes more recognizable, the liquidity of capital increases: banks are more willing to lend against those securities that are traded on the stock exchange.

Liquidity is not only about securities. For example, real estate is less liquid than stocks.

Spread
The difference between the buy (bid) and sell (ask) price of a stock at the same moment. If the difference is small, the spread is considered narrow, if it is significant – wide. The more liquid the security, the narrower the spread.
Volatility
Reflects the amplitude of price fluctuations over a certain period of time. It is usually measured in percentages, where values up to 2% are considered as low volatility, more than 10% – as high volatility.

Example: during the day, the minimum price per share amounted to 100 $ , and the maximum – 105. In this case, the volatility is equal to 5% – this is considered average.

Ticker
A short set of letters, numbers or symbols that designates the shares of a certain company. It is used for convenience, so that the full name is not constantly printed in stock exchange summaries.

Usually a ticker is 3-6 capital Latin letters. For example, the ticker MSFT stands for Microsoft stock, and SBER stands for Sberbank stock.
The price of a stock is divided
into a market price and a par value.
Nominal shareprice
It is calculated when forming a joint stock company by a simple formula: the amount of capital is divided by the number of issued shares. The nominal value is indicated on shares and share certificates and is used when calculating dividends. It is a conditional price, because it most often differs from the real – market price.
Market price of a share (quotation, share price)
The price at which the stock exchange is ready to sell or buy a security. During the day prices on the exchange are constantly changing, a special quotation commission fixes them and publishes official quotations: opening and closing prices of the exchange session, maximum and minimum prices of the day.

If the market price is multiplied by the number of outstanding shares, the result is the company’s capitalization (the market value of the issuing company’s equity).
To become a prepared investor, you need to speak the same language with experts, know how the market works and see the situation one step ahead. And then it is time to open an account and start investing.