Bangla Education & Technology Center

Some familiar terms related to share market.

What is security?

Some corporations and government agencies have the right to raise funds from markets by issuing securities. Security is a certificate that represents a claim on the issuer.Corporations and government agencies issue securities to obtain money from surplus units and enables to spend more money compared to they receive from normal operations.

What are the kinds of securities?

Securities can be divided into two types. They are debt securities and equity securities.

Debt securities are such type of certificates that refer to the funds (debt)borrowed by issuer.

Equity securities are stocks. Equity securities are such type of certificate that represent ownership on the issuer.

What do you mean by bond?

When corporations and government agencies issue long term debt securities to support their corporation, it is known as bond. The investors take return from as interest after six months from bond issuer. The investors are paid their principal at the maturity date.

What is spot trade?

Spot trade is a trade when shares are traded with matured cash or with only cash balance from investors portfolio not immatured balance. Generally spot trade occurs when a company has a record date for AGM (Annual General Meeting), EGM (Urgent General Meeting) or other purposes. After record date,from the next working day it’s normal trade begins. Generally spot trade prevails two or three working days before record date. In Bangladesh, we generally find three working days spot trade before  record date. It may varies from country to country.

What are the Matured Shares ?

Matured shares are the shares that have gained maturity after purchasing it and it is ready for sell. When investors purchase some shares of a certain company, it needs to be matured for sell. From the purchasing days, it takes two working days to be matured. That means it can be sold after two working days. In the third working day including from the purchasing day, shares become matured and investors can sell that shares in the market. But the maturity days may vary  from one country’s market to another country’s market.

What is matured cash?

Matured cash is something like matured shares. Matured cash is a cash from selling shares or mutual funds. From the selling day, the cash takes a minimum days to be matured such as in the third working days including selling day. After selling shares, when a minimum days have been passed, then the cash balance exists in the portfolio is called matured cash.

What is record date?

Record date is a date that is declared for some functions of a company to take the record of the investors that hold shares in that fixed day. In the record date, the trade of shares or mutual funds of that company remain closed.

What is EPS?

EPS means earning per share. EPS is the net earnings of a company that is divided by its existing number of shares. Suppose ABC company has earned $40000000 (four crores) and it has 10000000 (one crore) share then its EPS will be calculate by the following formula

EPS=Net Profit/Number of Shares

= 40000000/10000000

= $ 4  per share

What is retained earning?

Retained earning is a part of net earning that has been reserved for the future performance of the company after distribution of dividend among the shareholders. Retained earning is the deduction of dividends among the shareholders from net earning.

What are the categories of shares?

Probably, there is no category of share such as a, b, c, n or z. But in Bangladesh, we find a, b,n, and z category of shares.

A category of shares: When a company gives dividend of minimum 10% or more either by stock or cash or both per financial year, the BSEC ( Bangladesh Securities & Exchange Commission) declares the shares of that compay as A category of shares. Investors have deep attention on this shares and they prefer to purchase it from another category. The shares of this type of company are known as fundamental shares.

B category of shares: When a company gives dividend of under 10% either by stock or cash or both per financial year, the BSEC ( Bangladesh Securities & Exchange Commission) declares the shares of that company as B category of shares. Investors has a little bit less eagerness for this kind of shares.

N category of shares: When a new company is listed in the market, then it is declared as N category of share. Until crossing the first financial year, it exists. After the first financial year, it category depends on its dividend declaration and distribution.

Z category of shares: When a company is not able to declare and distribute annual divided, the BSEC declares its shares as Z category of shares. Investors have not eagerness this type of shares because it can’t give dividend as its financial condition is not favourable for investment. The maturity of its shares takes more working days than other types. That is why investors avoid to invest this type of shares.

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