Frequently Asked Questions

Stock Market Terms

1. Volume of transactions

   The items changing hands during a session or within a particular period of time.

2. Nominal value

   It is calculated by dividing the company share capital by the number of stocks. It is provided by the law that no stock may have a nominal value less than 0.30 Euros. Even in case of insolvency, the company must compensate the shareholders based on the nominal value.

3. Share capital

   A capital determined by law to found a public company. Based on the Articles of Association, it is divided into equal shares, the stocks. The share capital is paid by the shareholders.

4. Dividend yield

   It is dividend per share over share price. It shows how profitable is the investment in shares of a particular company. The higher the dividend yield, the more attractive the share will be for the investors.

5. Dividend

   It is part of the company profits distributed to the shareholders. The annual dividend which is paid to the shareholders depends on the company profits during the financial year.

6. Crash

   It is the sudden and high drop of the stock prices which may be caused either by adverse financial conditions or by speculation and unjustified increase of prices. The biggest “crash” occurred in October 1929 on the New York Stock Exchange.

7. Statement of Operating Results

   The account which presents the profits or losses of a company for a particular period of time. They are usually quarterly, half-yearly, nine-month and annual.

8. Capitalisation (stock market value)

   The value of the company as determined in the Stock Market. It results by multiplying the number of stocks by the negotiated price at the Stock Market.

9. Private placement

   When the stocks of a company are to be listed to the Stock Market for trade, a percentage is offered to the public. However, there is also a percentage not included in the public offering and this procedure is called private placement.

10. Balance Sheet

    A statement presenting the assets and liabilities of a company at a specific moment of time.

11. Marketability

    The number of stocks that “change hands” during a session or within a particular period of time.

12. Book value per share

    Equity / Total number of stocks.

13. Exercise

    A procedure through which a call option or a put option is used by the option holder to purchase from or to sell to the option seller the underlying asset at the option exercise price.

14. Options

    Standardized contracts traded between two counterparties (a purchaser and a seller) giving the purchaser the right, but not the obligation, to purchase from (in the case of call option) or to sell to (in the case of put option) the seller a specific amount of the underlying asset at a predefined future date and at an agreed price.

    European option
    The option may be exercised only at the expiration date.

    American option
    The option may be exercised within a particular period of time.

15. Free float

    The percentage of the share capital of a company which belongs to the general investment public.

16. Public Offering

    The procedure followed to list a company in the Stock Market. In order for a company to be listed in the Stock Market, it must meet certain conditions as to its financials and must obtain a permit from the competent authorities of the Stock Market.

17. Arbitrage

    A strategy according to which investors buy a share at one market and sell the same share simultaneously in a different stock market at a higher price recording riskless profit.

18. Hedging

    A strategy for investors lowering investment risks by assuming the opposite position in the derivatives market.

19. Mutual Fund

    A portfolio of liquid assets usually with a specific investment focus such as equities, bonds or equities of a specific geographic territory or sector. They are managed by Mutual Funds Companies.