Finance Glossary

Margin Trading:

            Margin means borrowing money from your broker to buy a stock. Investors generally go for trading on margin so to increase their purchasing power so that they can own more stock without fully paying for it. That means you will pay a part of the buy price and the broker will lend you the difference.

Alpha and Beta of Stocks:

            Every investment involves two important aspects – returns and risk. And every investor wants to get the maximum returns with minimum risk. In this regard the significance of Alpha and Beta parameters of the stock portfolio are used to describe the two main risks inherent in investing in stocks. Alpha relates to factors affecting the performance of an individual stock or the fund manager’s skill in selecting the stocks while Beta relates to market risks.

Sale Transaction Tax (STT):

            Sale transaction tax is imposed on the sale/purchase of securities by retail/institutional investors and is charged on total turnover (Cost of each share x  No. of shares).

Net Asset Value:

            The term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. Net Asset Value is popularly used in newspaper mutual fund tables to designate the price per share for the fund.