Glossary OST

Accounting Period The period for which the affairs of a company are being accounted for. The matching principle ensures that the incomes for the accounting period are offset against the expenses for the same period to arrive at the profit. The balance sheet shows the asset and liability position at the end of the accounting period. Companies are required to have an annual accounting period.

Accounting Policy For public companies, the accounting policies are set out in the first note to the accounts. They usually concern the method used to value stock and depreciate assets, the principles used in consolidating accounts, the method by which leases are charged, provisions made for deferred taxation, exchange rates used to value foreign currencies, what constitutes turnover and other items specific to the company.

Accounts Payable These are amounts reflected in the balance sheet as owing to the company's creditors in the balance sheet. These appear under current liabilities. These amounts owed to the company the short term, usually as a result of purchases on credit.

Accounts Receivable Money owed by customers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short time period, ranging from a few days to a year.

Accumulation When the volumes traded in a share start to pick up while the share price moves sideways or upwards, this is known as an accumulation phase. It indicates that the share is becoming stronger - after a period of accumulation, the supply of shares will be exceeded by the demand and this may lead to a sharp upwards move in the share price.

ACCUMULATION The first phase of a bull market. The period when farsighted investors begin to buy shares from discouraged or distressed sellers. The public is completely disgusted with the stock market. Volume is only moderate, but beginning to increase on the rallies.

ANALYST A person with expertise in evaluating financial instruments; he or she performs investment research and makes recommendations to institutional and retail investors to buy, sell, or hold. Most analysts specialize in a single industry or business sector.

APEX The highest point; the pointed end, tip, of a triangle

ASCENDING TREND CHANNEL When prices trend between two parallel trendlines, this is referred to as a channel

ASCENDING TRIANGLE A sideways price pattern between two converging trendlines in which the lower line is rising while the upper line is flat. This is generally a bullish pattern.

Bad Debts This is a debt, which cannot be recovered - thus forcing the company to write it off against profits. Most companies make provision for bad debts, a figure which is adjusted annually. When the economy is in recession, such provisions will tend to be higher, especially among banks. A provision for bad debts is a current liability.

Balance Of Payments The combined net position on the capital and current accounts of the country. The current account indicates whether South Africa is spending more foreign currency on imports than it is receiving for its exports, while the capital account shown how much money foreigners are investing in South Africa.

Balance Of trade This forms part of the balance of payments calculation, but refers only to the difference between the value of exports offset against imports. While balance of trade will reflect the level of physical imports relative to exports, the balance of payments reflects non-physical flows such as capital and dividends to and from abroad, debt repayment and receipts, interest payments and receipts (the so-called invisible items).

Balance Sheet A list of all balances taken from a company's ledger after incomes and expenses have been offset to arrive at a profit or loss. These balances are combined in carefully prescribed ways. The objective of the balance sheet is to give a snapshot of the company at a precise moment in time. This shows where the company obtained its money (liabilities) and how it has allocated that money (assets) so as to generate profits. Obviously, the sources of money must be totally accounted for in assets of one sort or another and therefore the "two sides" of the balance sheet must always balance.

Bank Rate Advertised minimum rate at which the South African Reserve Bank will discount bills of a currency of fewer than 120 days.

BAR CHART A graphic representation of a stock or commodity in terms of price and / or volume.

Basic Charge A Fee determined by a broker for shares bought or sold on the same day. This is additional to brokerage charges on the purchase and sale of shares, where such basic charge is levied by the member firm concerned.

BDA System Broker deal accounting service provided by the JSE. The system keeps the scrip records and books of individual broking firms in respect of their clients.

Bear Market Describes a situation where the majority of shares are dropping and the market is declining generally.

BEAR MARKET A long period of time when prices in the market are generally declining. Bear markets generally consist of three phases. Distribution, panic and discrouged or distressed selling.

Bear Sales Selling shares you do not possess in the expectation of being able to buy them at a lower price before they are due for delivery. Theoretically, the potential loss is limitless since the share price can rise to any level.

BEAR TRAP A situation that occurs when prices break below a significant level and generate a sell signal, but then reverse course and negate the sell signal, thus 'trapping' the bears that acted on the signal with losses. A bear trap is another form of whipsaw

Bear trend A long downward trend in a share's price, a sector's index the all-market index or other indicator.

Beneficial Owner Legal owner of stocks and shares and accompanying rights and dividends even though the shares are not necessarily registered in his name. These shares may also be held in a nominee. Beneficial ownership passes at the time of purchase.

Benefit Distribution A distribution made by companies to holders of the securites in the form of cash or securities, usually in proportion to their holding.

Bid Price The price at which a buyer is prepared to buy a share.

Bid/Offer Spread This is the difference between the prices at which market makers will buy and sell shares. For example, the market maker may offer to sell Anglovaal at R90 and bid (to buy) the same share at R89. For smaller companies the percentage difference between the bid and the offer price will be greater than for larger companies.

Bill Of Exchange Unconditional signed order in writing, addressed by one person to another. It requires the addressee to pay on demand, or at a fixed or determinable future time, a certain sum of money to a specified person, or to his order, or to bearer.

Black Chip Highly rated Black empowered company.

Block A large amount of stock sold as a single unit. This term is most often used to describe a unit of 1000 shares or more.

Blocked Funds Non-residents' funds, which are, blocked in terms of Exchange Control regulations. These funds cannot be remitted to the country or in which the owner resident, and may be used for the purchase of listed securities.

BLOW-OFF Sharp market turns accompanied by extraordinary volume which signals the final wave of the trend, followed by a reversal or period of stagnation.

Blue Chip A very safe share that has a history of sound management and steady dividends. Examples of such shares are Sasol, S.A. Breweries, First National Bank, Pick 'n Pay. Investors buy these shares for security rather than quick capital gains.

BLUE CHIPS A well known, public company that is thought to be in good financial shape and have sound fundamentals (profitability, earnings).

Bonus Issue A term synonymous with scrip issue and capitalisation issue which describes shares given without charge to existing shareholders in proportion to the shares already held.

Book Value This is the value at which an asset appears in the books, or accounts, of a company. Very often, book values are higher or lower than the real values of the assets, and can be misleading when considering the balance sheet. A good example of this is where a company buys land and records it in its books at cost. Over the years, the land becomes much more valuable, but no adjustment is made to the book value.

BOOK VALUE The theoretical measure of what a stock is worth based on the value of the company's assets less the company's debt.

Boom This describes a stage in the business cycle when economic activity is increasing.

Borrowings This is a term used by share market analysts to refer to a company's long-term indebtedness. It excludes those current liabilities, but which arise as the result of normal business practice.

Bottom The lowest point in a share's price cycle.

BOUNDARY Edges of a pattern

Bourse A European term, for a stock market. For example, the Paris Bourse, or the Frankfurt Bourse.

Break-Even A term used by accountants to indicate that a company has reached the point where it is not making a loss or a profit.

Break-Out A technical term which indicates that a share price has moved clearly up or down after a period of relative indecisiveness or stagnation. A breakout is often a buy/sell signal, especially in Point and Figure charting.

Break-Up Value Assessment of the remaining assets of a company on winding up after all liabilities have been paid. Such assets are available for distribution to shareholders of the company.

BREAKAWAY GAP Price gap that forms on the completion of an important price pattern. A breakaway gap usually signals the beginning of an important price move.

BREAKOUT When a price of a security emerges from a previous trading pattern. The new price 'breaks out' above the high (or below the low) trading pattern lines. Breakouts are used by technical analysts to predict substantial upside or downside movement.

Bridging Finance This is a loan obtained by a company to tide it over a short temporary cash flow problem.

Brokerage Commission charged by a broker for the purchase or sale of shares.

Bull Person who buys shares in the expectation that the market will rise and he will be able to sell them at a higher price.

BULL MARKET A long period of time when prices in the market are generally increasing. Bull markets generally consist of three phases. Accumulation, steady advance of prices and blow-off.

BULL TRAP A situation that occurs when prices break above a significant level and generate a buy signal, but suddenly reverse course and negate the buy signal, thus 'trapping' the bulls that acted on the signal with losses. A bull trap is another form of whipsaw

Bull trend A long period of consistently rising share prices, or index levels. Usually such trends last from 2 to 4 years.

Bullion Any precious metal (most commonly gold) which has not been processed into jewelry, coins, or used for any other manufacture. It is normally kept in bars known as ingots.

Business Cycle The overall upward - (peak) - downward - (trough) pattern that is followed by business activity. There are a number of theories about the causes of these cycles, but no real explanation for this. The share market tends to anticipate major changes in the direction of the cycle by about 6 months. The cycle normally lasts about 3 to 5 years.

Business Day A day on which the Stock Exchange is open for business. This would exclude Saturdays, Sundays or any holiday on which the Stock Exchange is closed. It is also known as market day.

Buyer's Price Price indicated by a buyer at which he is prepared to purchase shares.

Buying Pressure A high demand for a particular share or class of shares which exceeds the supply and so causes the price to rise.

Call Option Right to purchase (call) specified shares within a specified time (option period) at a specified price (striking price). By the payment of a premium per share the investor buys the right to demand delivery of the shares at any time during the running of the contract and at the strike price when the call was purchased. (Useful when a sharp rise is anticipated, as the only immediate capital required is the call money.)

Call Warrant A contract entitling the buyer to buy a fixed quantity of the underlying asset at a stated exercise price.

Capex An abbreviation for capital expenditure. It is often used when referring to gold mines. It refers to expenditure, which is of a capital nature - in other words used to purchase some sort of fixed asset.

Capital Money which is used to supply "working" capital or to purchase capital goods, which are to be used to generate the income of the company. Capital can also include the reserves of undistributed profit retained by the company. Share capital refers to the money raised as a result of the sale of company shares. Working capital is used to buy stock and finance debtors.

Capital Appreciation Increase in capital value of a portfolio or a particular share as a result of a rise in the market place.

Capital Gain/Appreciation A capital gain occurs when an investment is sold for more than was paid for its purchase. A dividend is an income gain, or the natural return on an investment. Capital appreciation occurs when shares or other investments are at a higher market price than they were purchased. Until the shares are sold, no capital gain has been realised.

Capital Gains Tax A tax on profits realised from buying a security at one price and selling it (or holding it to redemption and then redeeming it) at another.

Capital Growth See Capital appreciation

Capital Repayment Return to shareholders of all or any portion of the issued capital of a company on the winding up of operations; or the return of capital in excess of a company's requirements.

Capital Reserves a. As controlled by operation of law. These are amounts which are by law required to be set aside and may not be utilised for purposes other than those specifically provided for by the Companies Act, 1973, as amended or by that company's articles of association. b. General. Appropriation made from profits at the discretion of directors, to meet future commitments of the company. Such appropriation, if subsequently found to be excessive or unnecessary, may be added back to the balance of unappropriated profits through the appropriation account.

Capital Structure This is the way in which a company has raised the capital needed to establish and expand its business activities or, more specifically, the number of shares and long-term loans in each class that have been authorised and issued. Most Stock exchanges reference books describe the capital structure of listed companies.

Capitalisation Issue Free issue to shareholders of new fully paid shares by a company from its reserves. If of the same class the shares will rank pari passu with existing shares, and are sometimes called a bonus issue. Companies may issue a capitalisation issue instead of dividends.

Cash Flow Annual net profits retained in a business, plus the depreciation provision. The concept of cash flow is based on the fact that, although it is a cost, the charging of depreciation does not in itself involve any cash outlay. (The cash flow is useful in gauging a company's projected financial position and its dividend potential.) Sometimes it may be necessary to calculate cash flow on the basis of equity earnings plus the depreciation provision (i.e. before deducting the cost of ordinary dividends). To distinguish between the two concepts, they may be referred to as the 'gross cash flow' and the 'retained cash flow'.

Cautionary Announcement This is a publicly advertised announcement made by a listed company to urge shareholders to exercise caution when trading in its shares. These announcements are advertised in the Business Day (and other leading papers) and SENS whenever a company is involved in any activity (such as negotiating a take-over) which should materially affect the price of the shares. The idea is to protect investors from potential losses should the share price alter appreciably in the short term.

CD Central Depository Limited, the South African central securities depository registered under the Act.

CD Participant A depository institution admitted by the CD as a participant in terms of the Act, the CD Rules and the CD entry criteria.

Central Bank Major regulatory bank in a nation's monetary system, generally government controlled.

Central Securities Deposit An institution established to hold equities, debt or both and to effect transfers between accounts, typically by book-entry.

Chairman's Report Unlike the Directors' Report this is not a legal requirement, but has become customary, especially for listed companies. Normally, it contains the policy of the company and its strategy for the coming year. This often includes a picture or projection of what is expected in terms of growth in the year ahead. It is interesting to look through the past projections of a particular chairman to see how accurate they have been. This will give you quite a good measure of his understanding of his company and industry.

CHANNEL When prices trend between two parallel trendlines, this is referred to as a channel

CHART A graphic representation of a stock or commodity in terms of price and / or volume.

Charting Price history of a share presented in the form of graphs, which can be interpreted to indicate potential movements in the price. (The charting of share prices, known as technical analysis, is considered by many to be an important adjuct to fundamental investment analysis.)

Chinese Wall A communications barrier between members or departments of a financial institution to prevent the unauthorised transfer of price sensitive information. Chinese walls are imaginary but are taken seriously in an attempt to minimise conflicts of interest.

Clearing The process, in conjunction with settlement, of determining accountability for the exchange of money and securities between counter parties to a transaction. Clearing creates binding statements of obligation for securities and/or funds.

Clearing And Settlement System The system, which collects, processes and transmits the information, which enables settlement. This includes information on trades, scrip holdings, released scrip, funds commitment, CD transfers and SA Reserve Bank settlement account entries.

Clearing House Physical area where the clearing system of the JSE operates.

Clearing System The computerised clearing system on the JSE which confirms deals between brokers on a daily basis and prepares daily statements for the purpose of settling these deals and entitlements.

CLIMACTIC TOP see blow-off

Closing Date Of Offer Last day on which an offer made by a company to its shareholders may be accepted (eg. rights offer or offer to purchase a shareholder's share in a take-over bid).

Closing Price Last price of the day for a particular share. This could be a bid, offer or sale price.

CLOSING PRICE The last sale price of the trading session for a stock or commodity.

COIL Another term for a symmetrical triangle

COMMISSION The amount charged by a brokerage house to execute a trade in a stock or commodity

Commodity Basically these are raw materials such as gold, silver, soya beans, sugar, coffee, steel etc. Many commodities are traded in markets around the world. The gold price is determined in such markets, so they affect any supplier of gold such as South Africa.

COMMON GAP Any hold or gap in the chart occuring within an area pattern. These type of gaps have no forecasting significance.

Common Stock A term used in America to describe their equivalent of ordinary shares.

Conditional Offer An offer made to the shareholders of a company conditional to the occurrence of some event. Typically, where a take-over bid is being made, the predator will make an offer to shareholders conditional to its being accepted by more than 50% of the shareholders.

Confirmation An electronic confirmation by a banker or a CD Participant

CONGESTION The sideways trading from which area patterns evolve.

Conglomerate These are usually very large, sometimes multinational, holding companies involved in a wide variety of industries

Consolidation Of Shares Consolidation of a company's shares into a lesser number of greater nominal value.

CONSOLIDATION PATTERN Also called a continuation pattern. It is an area pattern which breaks out in the direction of the previous trend

Contract note / Broker's note Contract note (also called broker's note) which a broker is required to send to a client recording the details of a purchase or sale of shares including the commission payable, the basic charge, the uncertificated securities tax (UST) as well as any other mandatory charges and the settlement period date.

Contract Price The price at which a bargain in any share was struck.

Contractual Settlement The market convention embodied in the rules of the JSE whereby a client has a contractual obligation to cause a trade to be settled on settlement day.

Controlled Client A client whose funds and uncertificated securities are under the control of a Custody and settlement Member or Custody and Settlement Agent, or whose settlements take place via the CSD participant of the member as if the client's funds/sec were under the control of a CSM/A. The broking member will either have a portfolio for this client or will manage the purchase and sale of shares on the account of the client. Settlement of the trades will take place through the boking member's CSDP.

Conversion ratio The number of warrants that must be exercised in relation to one share or an underlying parcel of shares.

Convertible Securities Securities issued in one form with provisions allowing them to be converted into securities in another form. For example, debt instruments that can be converted into ordinary or preferred stock, subject to specified circumstances.

Corporate Actions Any action by an issuer of investments, or by another party in relation to the issuer, affecting an investors entitlement to investments or benefits relating to those investments. This includes, but is not restricted to, takeovers, capital restructuring and related activities, rights issues, stock conversions, scrip dividends and redemption's. Also known as Entitlements and Benefit Distributions.

CORRECTION After an advance, a decline that does not penetrate the low from which the advance began is known as a correction. Also referred to as a retracement, a correction usually retraces 1/3 to 2/3 of the previous advance

Counterparty The opposite party to a trade. Usually one party to a trade refers to its trading partner as a 'counterpart'

Coupon Rate Rate of interest payable on gilt-edged securities, or bonds.

CSD Central Securities Depository

CSDP Central Securities Depository Participant

Cum Dividend/Rights Market quotation, which includes participation in the current dividend/ rights.

Cumulative Dividends If the payment of dividends on cumulative preference shares is suspended they accumulate year by year and these arrears must be paid before dividends on ordinary share are resumed. (Dividends on preference shares are not cumulative unless specifically stated.)

Current assets ratio Company's total current assets divided by total current liabilities (e.g. if the total current assets are double the current liabilities then the ratio is expressed as 2:1)

Current or liquid assets Assets which may be turned into cash more readily than fixed assets. These are usually stocks, debtors and cash in hand, and provide the working capital of a company.

Custodian A depository institution, such as a central depository, bank or JSE member firm which holds securities in safe custody on behalf of its participants, members or clients.

DAILY RANGE The differnece between the high price and the low price during one trading day.

Day's Move The extent to which a share moves during the course of the trading day on the Stock Exchange. You will find the day's move quoted as a separate column in the better newspapers, both in cents and as a percentage. In essence this shows the difference between one day's closing price and the next.

Debenture Money raised by a company through loans. Holders of debentures, which are transferable, are creditors of the company with specific rights as to repayment of capital and interest. Interest must be paid regularly, whether or not there are sufficient profits: and if interest is not paid the debenture holders enforce their rights by obtaining judgement against the company or placing it in liquidation.

Debenture, convertible redeemable Debenture embodying the right to convert, within a specified time, all or a portion of the holding into ordinary shares at a stipulated price.

Debt/Equity Ratio The ratio of shareholders' equity in the company (share capital and reserves) to company borrowing of the company. The company has two primary sources of capital: - shareholders equity (consisting of the money raised when the shares they hold were issued, plus any profits which have not been distributed as dividends); and money obtained in the form of loans from banks and other lending institutions. The Debt/Equity ratio shows who owns what in the business. For example if shareholders had only R1 for every R1.50 of the bank's then the company would be "highly geared" and in danger of going beyond its credit worthiness. This means that the bank would effectively control the company by being able to close it down by simply calling in its loan.

Deferred shares Special category of share where the payment of dividends is deferred (a) for a fixed period or (b) until total dividends on ordinary shares reach a certain amount. (Such shares are issued by a company wanting to raise additional capital for a project that may not become revenue producing for some time.)

Deflation The opposite of inflation. A period where the purchasing power of money increases in terms of a basket of goods and services.

Delivery versus Payment The good delivery of securities in exchange for the simultaneous, final and irrevocable payment of money.

Delta A measure indicating the sensitivity of a warrant's price to price movement in the underlying security. Call warrants have positive deltas while put warrants have negative deltas.

Delta The delta of the warrant represents the relative change in the value of the warrant to changes in the value of the underlying share price.

DEMAND Buying interest for a stock at a given price.

Dematerialisation The elimination of certificates or documents of title which represent ownership of securities, so that securities exist only as electronic records.

Depreciation Allowance for wear and tear on fixed assets, the declining value of which affects the asset value of a company. This allowance is regarded as a cost and in most cases is allowable as an expense in assessing a company's tax liability.

Derivatives A contract whose value is dependent on the performance of some underlining asset or market indicator.

DESCENDING TREND CHANNEL The area between the two parallel downsloping trendlines comprising of the basic down trendline sloping across the reaction peaks of a declineand the parallel downsloping trendline sloping across the lows of the decline.

DESCENDING TRIANGLE A sideways price pattern between two converging trendlines in which the upper trendline is descending while the lower line is flat. This is generally a bearish pattern.

Discount Amount by which a newly listed security is quoted below the offer price (opposite to premium). A share can also be said to stand at a discount to net asset value when the market price is lower than the balance sheet value per share.

Discretionary Account An account opened with a stockbroker where the stockbroker may trade on the client's behalf without consulting him. The opposite of a non-discretionary account

Distributable Reserves An item on the balance sheet, which appears on the Capital Employed (or liabilities) side. These are reserves, which may be distributed to shareholders in the form of dividends because they have been built up out of the profits of the company.

DISTRIBUTION The period when farsighted investors senses that the market has outrun its fundamentals and begin to unload their holdings at an increased pace. Trading volume is still high, but diminishes on rallies.

DIVERGENCE When new highs (or lows) in one indicator are not realized in another comparable indicator.

Diversification Spreading of a share portfolio over a variety of companies operating in different fields. The opposite to putting all one's eggs in one basket. This is to lower the risk of a portfolio.

Dividend Payment made to shareholders out of a company's profits after taxation and prior charges have been met.

Dividend cover on preference shares Earnings less tax and the interest of minority shareholders divided by the annual cost of dividends on preference shares. (This shows the degree of security of the preference dividends and also gives an indication of the company's gearing.)

Dividend Equalisation Reserve A distributable reserve, which is specifically set up to ensure that dividends remain stable despite, changes in earnings. If a company normally pays a dividend of 10 cents per share, the directors might establish a dividend equalisation reserve so that this dividend level is protected against unprofitable years.

Dividend per Share (DPS) A company's ordinary dividend divided by the number of ordinary shares in issue, usually expressed as a number of cents per share

Dividend Yield (DY) Dividends per share expressed as a percentage of the current market price. For example, if a company pays a dividend of R10 000 and it has 10 000 ordinary shares in issue (sold to the public) then the dividend per share will be 100 cents. If the current market price is 2 000 cents per share, then the dividend yield will be 5%. This shows that if you bought the share at its current price, and it continued to pay the same dividend you would receive a 5% return per annum.

DIVIDENDS A share of the profits - in cash or stock equivalent which is paid to stockholders

DOUBLE BOTTOM A reversal chart pattern displaying two prominent troughs. The reversal is complete when the resistance peak is broken.

DOUBLE TOP A reversal chart pattern displaying two prominent peaks. The reversal is complete when the support trough is broken.

Dow Jones Index Various indices are compiled daily of the prices of securities on the New York Stock Exchange. The Industrial Average measures changes in the unweighted arithmetical average of thirty leading industrial shares. There are similar indices for Utilities, Transportation, composite and Bond Averages.

DOW JONES INDUSTRIAL AVERAGE A price-weighted average of 30 blue chip stocks published by Dow Jones & Co. Because it is price-weighted, stocks with the highest prices will have the most influence and those with the lowest, the least influence.

DOW JONES TRANSPORTATION AVERAGE An index consisting of 20 stocks in the transportation business. Originally the index only included railroads; now airlines and trucking companies are included. According to the Dow Theory, a new major high in the DJIA should be confirmed by a new major high in this index before it is considered a reliable signal.

DOW THEORY One of the oldest and most highly regarded technical theories. A Dow Theory buy signal is given when the Dow Industrial and Dow Transportation averages close above a prior rally peak. A sell signal is given when both averages close below a prior reaction low.

Earnings Yield (EY) Earnings per share expressed as a percentage of the current market price of the share. For example, a company with 25 cents earnings per share and a market price of 250 cents would have an earnings yield of 10%.

ECH Equities Clearing House, which is the clearing house operated by the JSE to facilitate the clearing and settlement of JSE trades.

Electronic Scrip Register The electronic record which evidences the rights of owners to securities in a dematerialised market.

Electronic Settlement The settlement of transactions by electronic means STRATE will ensure that, all transactions on the JSE will be settled electronically.

Equity That portion of share capital which carries risk, and shares in profits through dividends that are dependent on profitability. Ordinary shares are often called equity shares, and other types of shares, which carry less risk as convertible or participating preference shares are known as "near-equity". Equity is the share capital and reserves of the company - which is the same as its net assets (net of liabilities). You should be careful because in many instances, the book value of assets such as stock and real estate is very different from the market value.

Equity derivative A generic term for derivatives involving stocks/shares - whether in individual companies, baskets or indicies of such stocks/shares.

Equity Option An option involving a stock/share, or a basket or index of these.

Equity share capital or equity shareholders' funds Funds invested in a company plus the profits, which have been ploughed back.

European Style A warrant that is only exercisable at expiry.

Ex dividend/rights Market quotation, which excludes participation in the current dividend/ rights.

Exchange traded The generic term used to describe futures, options and other derivative instruments traded on an organised exchange.

Exercise The act by which the buyer/holder of an option takes up his rights to buy or sell the underlying instrument at the strike price.

Exercise Price The price at which the underlying asset will be bought or sold if the holder exercises the warrant. Also called the strike price.

EXHAUSTION GAP A price gap that occurs at the end of an important trend, and signals that the trend is concluding.

Expiry, Expiration date, Maturity date The date and time when a transaction matures. Most commonly used to describe when the buyer/holder of an option ceases to have any rights under the contract, or when a futures contract month ceases trading.

Exposure The degree to which a portfolio or other investment is susceptible to risk from certain factors. For example, a share in a company whose main business is importing would be highly "exposed" to the Rand/Dollar exchange rate.

Extraordinary Event A situation that leads to the warrant lapsing prior to expiry. In this situation Deutsche Bank will attempt to make a fair cash settlement to Warrantholders.

Failed trade Any securities transaction that does not settle on contracted settlement date because one of the settlement parties does not meet the settlement conditions.

FALLING WEDGE An area pattern with two downward slanting converging trendlines. Volume diminishes as prices move toward the apex of the pattern.

FALSE BREAKOUT A breakout which is confirmed but which quickly reverses and eventually leads the stock or commodity to breakout in the opposite direction.

FAN LINES A set of three secondary trendlines drawn from the same starting high or low, which is spread out in the form of a fan.

FIBONACCI NUMBERS The Fibonacci number sequence (1,2,3,5,8,13,21,34,55,89,144,...) is constructed by adding the first two numbers to arrive at the third. The ratio of any number to the next number is 61.8 percent, which is a popular Fibonacci retracement number. The inverse of 61.8 percent is 38.2 percent, also used as a Fibonacci retracement number. It is the ratio of the Fibonacci sequence that is important and valuable, not the actual numbers in the sequence.

Fill or Kill (FK) means the full order must be executed immediately or otherwise cancelled.

Final Dividend The dividend paid when the directors know what the final profit for the year will be. Added to the interim dividend, this gives the total dividend for the year.

Financial Times Industrial Index A share price index calculated hourly during business hours from an unweighted average of thirty leading chips dealt in on the London Stock Exchange. Until recently this index was the best known barometer for the stock market but this has now been superseded by the Financial Times Share E 100 Share Index. (FTSE)

Fixed assets Items owned by a company, such as land, buildings, machinery and equipment

Fixed Income These are investments, which give a set return, such as preference shares, bonds, debentures and savings accounts.

Fixed interest-bearing securities Securities, such as debentures or government, municipal or statutory loans, which pay a fixed annual interest.

FLAG A continuation chart pattern that generally lasts less than three weeks and resembles a parallelogram that slopes against the prevailing trend. The flag represents a minor pause in a dynamic price trend.

Foreign Reserves A reserve of precious metals and foreign currencies kept by the Reserve Bank.

Form CM42 Also known as a transfer deed. When signed by a registered shareholder, it allows for the transfer of ownership of securities.

FSB Financial Services Board. The statutory body charged with the regulation of financial services, excluding bankers.

FTSE The Financial Times Stock Exchange 100 stock index, a market cap weighted index of stocks traded on the London Stock Exchange.

Fundamental analysis Assessment of the merits of a company based on analysis of its past history present trading results, future prospects, strength of management and general economic conditions in the field in which it operates. The techniques of fundamental analysis may be contrasted with those of technical analysis (or 'charting') which are devoted exclusively to predicting price movements of shares or other tradable assets.

FUNDAMENTALS Information on a stock pertaining to the business of the company and how it relates to earnings and dividends.

Future An agreement to buy/sell, a standard quantity of a specific commodity or financial instrument, at a standard future date at a price agreed between parties to the contract. Futures contracts are traded on organised exchanges. e.g SAFEX (SA Futures Exchange)

G30 The Group of Thirty, a private group of prominent financial industry participants which in 1989 proposed nine standards for improving the world securities industry's efficiency and reducing settlement risks.

GAP Gaps form when opening price movements create a blank spot on the chart. This occurs when the high of the day is below the low of the previous day or when the low of the day is above the high of the previous day. Gaps are especially significant when accompanied by an increase in volume.

Gearing or leverage Ratio of prior charges to equity capital. It may be computed on either an income or a capital basis. High-income gearing results in the attributable earnings of the equity capital fluctuating more violently than the total profits. For example, if the profits are halved, the amount available for ordinary shareholders may drop to a third of the former figure because of the deduction of a fixed preference dividend charge. Similarly, if assets fall by 10% the value of the equity might fall by 15%.

General Offer An offer made to all shareholders of a company for the purchase of their shares. The purchase price could be in cash or in shares of a predator company or a combination of both.

Gilt edged stocks 'Gilts' Stocks issued by governments and government-sponsored bodies, such as Escom and Iscor, and stock issued by leading municipalities. They pay a fixed rate of interest. (The coupon)

Gilts A debt issued through the Treasury, public entities and municipalities, with the principal and interest guaranteed by the government. Also referred to as gilt-edged security or gilt-edged stock

Going public Taking steps necessary to get a listing on the Stock Exchange.

Good delivery Scrip which is acceptable to a company for registration. (It is the selling broker's responsibility to see that the scrip he delivers conforms to 'good delivery requirements.)

Governmental/municipal stock Stock paying a fixed rate of interest issued by a government or municipality. Also known as 'gilts', or gilt-edged stock.

Green Chip Environmentally friendly companies

Group The holding company of a number of subsidiaries. Such companies produce Group Consolidated Accounts once per annum showing the consolidated position and performance of all the subsidiaries.

Growth stocks Shares which are expected to pay increased dividends over the years as a result of rising profits and an increase in market price.

Guarantee Fund A fund maintained by an exchange to recompense investors when a member firm fails to meet its obligations

HEAD AND SHOULDERS BOTTOM A well-known reversal pattern marked by three (or more) prominent troughs with a middle trough (the head) that is lower than the other troughs (the shoulders). When the trendline (neckline) connecting the peaks at the top of the pattern is broken, the pattern is complete.

HEAD AND SHOULDERS TOP A well-known reversal pattern marked by three (or more) prominent peaks with a middle peak (the head) that is higher than the other peaks (the shoulders). When the trendline (neckline) connecting the troughs at the bottom of the pattern is broken, the pattern is complete.

Headline Earnings Per Share (HEPS) Taxed profit less preference and minority shareholders' interest, divided by the number of ordinary shares issued which is EPS. HEPS excludes from this EPS figure profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write off of their values.

Hedge Action taken by a buyer or seller to protect his business or assets against a change in prices.

Hedging Dealing in such a manner as to reduce risk by taking a position that offsets an existing or anticipated exposure to a change in market prices. You are therefore attempting to lock in the profit/loss on the position at the current level.

High This is the highest cash sale for a given period. This value is adjusted after capital structure changes.

HISTORICAL DATA A series of past daily, weekly, or monthly market prices.

Holding Company Any company, which owns more than 50% of the voting capital of another company, or can be, said to have effective control over the appointment of its directors.

HORIZONTAL CHANNEL When tops of the rallies and bottoms of the reactions form along lines which are horizontal and parallel to one another.

Income In accounting terms, this refers to all revenues received by a company, both as a result of its sales and other sources such as interest, dividends or rent.

Index A weighted or unweighted average of the prices of a group of shares. There are many types of 'indexes' (indices) for sectors, sub-sectors and entire markets. There are also a number of ways to weight the data, but essentially the idea is to allow for the fact that the market capitalisation of shares differs widely within the same sector. This is partly because each company has a different number of shares in issue. Over and above this, shares leave the sector, and new ones join it. The calculation of indices is the work of actuaries and this explains the term JSE "Actuaries" Indices. Indices are useful for determining the general direction of a sector and perhaps comparing individual shares with the group average. Sectors may also be compared, and a careful study of index trends will allow you to move your money around the market from one profitable sector to another.

Initial Margins A relatively small deposit - in comparison to the nominal value of the contract - which both the buyer and seller must lodge with the clearing house as security. In very volatile markets, the initial margin required can vary several times during the course of a single day.

INSIDE DAY A day in which the daily price range is totally within the previous day's daily price range.

Insider trading The illegal dealing in shares by people who, because of their privileged position, have information, which materially impacts on the value of the shares, before that information has been made public. This type of dealing is extremely difficult to control and is a constant feature of most share markets, especially where special situations such as take-overs are about to occur. The only protection is to keep a careful watch on the volume traded, because massive volumes are an indication that someone knows something that you don't

INSIDERS Individuals who possess information likely to affect the price of a stock, but which is unavailable to the public.

Institutional Investor An organisation (as opposed to an individual), that invests funds arising from deposits, premiums etc. Examples are insurance companies, mutual funds and investment trusts.

Intangible assets Non-physical items such as goodwill trademark patents, etc. In computing a company's net worth the value at which any intangible item is carried in the balance sheet is excluded.

Interest Rate The price of money. Money behaves in much the same way as a commodity, in the sense that when it is in short supply, it becomes more expensive and vice versa. The interest rate is the cost of borrowing it and the reward for lending money. There are a variety of different interest rates, which apply to different types of money. For example, the prime overdraft rate is the rate at which the banks' most creditworthy clients borrow on overdraft: the banker's acceptance rate, or BA. Rate, is the rate at which the banks discount short-term paper over say 90 days and so on. The size of the money supply is a primary determinant of the interest rate, and also the point in the business cycle. A fall in interest rates is normally seen as an indication of a pending upswing in the economy.

Interim Dividend A dividend paid out by the company when the directors have received the interim (half year) financial results. The final dividend is paid when the final profits are shown in the final accounts.

Interim Earnings Displays the earnings declared for the specified share either during the current or previous financial year. The figures are adjusted for any subsequent splits, consolidations or capitalisation issues that might have taken place.

INTERMEDIATE TREND The intermediate trend or secondary trend refers to a trend against the primary trend or major trend.

Intrinsic Value The perceived value of a natural object, e.g. a precious metal, regardless of its actual price at any given time. In economics, value is determined by demand and supply and is denoted by price.

Inventory Another word for stocks of raw material, work in progress, consumable stores and finished goods. The valuation of inventory is critical to the balance sheet.

Investment Holding Company A Company which holds other companies as subsidiary or associate companies.

Investment trusts Companies specialising in investing in shares. Their capital is fixed and shares in investment trusts listed on an exchange are bought and sold in the market like other shares. Also known as 'closed-end' trusts as their capital is fixed.

Investor Protection Levy This levy - which is 0.0003% of value of shares bought or sold is used by the JSE to monitor transactions on the market to ensure that they have not been conducted with insider information.

ISIN International Securities Identification Number designed by the International Organisation of Standardisation (ISO) and advocated by G30.

ISLAND REVERSAL A series of days that is usually formed after a sharp rally or decline, which is seperated from the previous move by an exhaustion gap, and a move in the opposite direction which follows by a breakaway gap

Issued share capital Amount of share capital actually issued by a company.

Issued Value Issued value = number of shares issued X par value

IT3(b) Income Tax form The IT3(b) is a South African Revenue Service (SARS) Income Tax form used for the return of income from investments, property, rights and royalties.

Joint account Joint venture between a local firm of stockbrokers and one of a recognised stock exchange outside South Africa where arbitrage is conducted for mutual profit.

Joint stock company Company owned jointly by a number of shareowners. All companies listed on the JSE are not only joint stock companies, with limited liability, but are also public companies in that they have more than 50 shareholders. The shares of a public joint stock company are readily transferable from one person to another and can conveniently be marked on a stock exchange.

JSE Member Firm A member firm of the JSE who may trade either as an agent or a principal in any transaction - usually referred to as "stockbroking firm"

JSE Rules and Directives Rules, sets of rules and directives established by the JSE to govern all the workings of the exchange in terms of the Stock Exchanges Control Act (SECA), Act 1 of 1985

JSE Trustee (Pty) Ltd. A company formed by the JSE to safeguard the surplus funds belonging to a client and held by a broker who is operating a managed account on behalf of the client.

Judicial Management Where a company is wound up for financial reasons, it is sometimes the case that it could have been saved had it been managed well. Judicial management was introduced to assist this type of company to overcome a temporary setback without going out of business. A judicial management order usually gives the company a moratorium on its debts. Essentially, the court replaces the directors. A provisional judicial manager is appointed, to assume control until the final judicial manager can be appointed. Application for judicial management may be made by the company itself, a creditor or a member. If the judicial manager cannot return the company to solvency, then he may recommend to the court that it is wound up.

Last Day To Register Date by which securities must be lodged with the company's office to qualify for dividends rights or other corporate actions.

Last Transaction Price (Last trade) The price at which a certain share was last traded. This information is normally reported on the price page of your newspaper in a column headed "last". It is sometimes called the "closing" or "ruling" price. Normally, papers report on the position at the end of the morning or afternoon session.

Leading Indicators These are indicators, which tend to anticipate movements in other indicators. For example, the paper and packaging industry tends to start experiencing better conditions before the rest of the economy because almost all products have to be packaged before they can be sold.

Limited liability Limitation by a company's memorandum of a member's (shareholder's liability to the amount, if any, unpaid on shares held by him (Section 5 Companies Act). The principle of limited liability is essential to the formation of a joint stock company.

Limited Order An order, which may only be effected at prices equal to or better than the price on the order.

LINE CHART Price charts that connect the closing prices of a given market over a span of time that form a curving line on the chart.

Liquidation The Process whereby a company is dissolved. The court, the company itself, a shareholder, the Master the court, the judicial manager, a creditor, or the minister may initiate such dissolution. A liquidator is appointed, who arranges to sell off all the assets of the company and uses the proceeds to pay its creditors (firstly the secured creditors and then the unsecured ones). Once the creditors have been paid then the preferential shareholders are paid, and then finally the ordinary shareholders.

Liquidity The ability of a company (or person) to raise cash on short notice, usually with a view to meeting debts, unexpected expenses, or to take advantage of opportunities. It is wise to keep a portion of your wealth in cash so that you will be able to take advantage of unforeseen opportunities (or meet unforeseen expenses) without being forced to sell shares at a time, which may not be advantageous. Excessive liquidity usually means that the company or individual is overly conservative and is not reaping the full benefit of investment opportunities

LIQUIDITY The ease with which a stock may be bought or sold in volume on the marketplace without causing dramatic price fluctuations. A highly liquid stock is characterized by a large volume of trading and a large pool of interested buyers and sellers.

Listing Official granting of a quotation of a company's shares on the JSE. (A listing is granted when a company has fulfilled the Exchange's rules and requirements for listing.)

Listings department Branch of the JSE administration responsible for the administration of the JSE's listing requirements, both as they affect new listings and existing listed companies.

Local Counter-Party Transaction A transaction where a member firm trades as a principal with a person, other than a member firm in South Africa.

Long Position The result of a trader having bought more than he has sold in any particular market/commodity/instrument/contract.

Long-term Liability A debt, which is to be, repaid over years rather than months. A good example of this would be debentures, which carry a fixed percentage, return and are redeemable by the company at some future date. Long-term Liabilities are found on the liabilities side of the balance sheet immediately below share capital and reserves.

MACD An indicator developed by Gerald Appel that is calculated by subtracting the 26-period moving average of a given security from its 12-period moving average. MACD displays trend following characteristics by comparing the moving averages, and by plotting the difference of the moving averages as an oscillator, MACD displays momentum characteristics.

Main Board Listing For companies with, among other things, a share capital of not less than R25million and an audited profit level of at least R 8 million before taxation at the time of listing.

MAJOR TREND Major trend refers to a trend which lasts at least one year.

Management Buy-Out The acquisition of all or part of the share capital of a company by its directors and senior executives. The management is usually assisted by loans from an institution.

Marginal Producer A term usually applied to gold-mining companies with a very high cost of extraction and therefore a low margin. If their cost of extraction is close to the gold price, then very small fluctuations in the gold price can easily double or halve their profitability. This is reflected directly in their share price, which tends to fluctuate widely for relatively small changes in the gold price.

Mark to Market Calculation of the difference between the contract price and the market price.

Market Appreciation The difference between what was paid for a share and its current market price. This is distinct from the realised profit, which can only occur if the share is actually sold and the money is in the bank.

Market Breadth The extent or scope of change in stock prices. Market breadth is most often measured by analysing the number of stocks that advanced or declined during the period or by counting the number of shares in issue by their current market price.

Market depth The top 5 bids to purchase a share and the top 5 offers to sell a share in the market is known as market depth. The bids are listed by highest bid first with the corresponding quantity and the number of orders that make up that quantity for the bid. The offer are listed by lowest offer first with the corresponding quantity and the number of orders that make up that quantity for the offer. When a bid and offer are at the same price then a trade occurs.

Market Order An order given to a broker with no price limitation. The broker is instructed to obtain or sell a specific number of shares "at market" - as opposed to a limit order, where the instruction is only valid above or below a pre-determined price.

Market price Ruling price of shares on the Jet System.

Marketability Attribute acquired by a share when it is dealt in regularly and can thus be bought and sold easily.

Matched The purchase leg of a deal will be matched when the corresponding sales leg is reported to the computer, if these are equal in every respect, and vice versa. A matched deal is a confirmed deal.

Maturity The date when a transaction is due to end, or the period of time until that date is reached.

MEASURING GAP A gap that frequently occurs at just about the halfway point of the current move.

Memorandum of association Document required by law for the constitution of a company. It must state the principal object of the company.

Merger (Also called an amalgamation.) This occurs where two or more companies come under the control of one, whose shareholders then become the shareholders of the companies that were merged. Sometimes one of the two merged companies is used as a vehicle for the merger, and sometimes a totally new company is formed for this purpose. A merger is seen as distinct from a "take-over" or an "absorption".

MINOR TREND These are the day-to-day fluctions of prices, usually less than six days and seldom longer than three weeks.

Minority shareholders Shareholders who, individually or collectively, own fewer shares than the controlling group.

MOMENTUM INDICATOR A leading indicator measuring a security's rate-of-change. The ongoing plot forms an oscillator that moves above and below 0. Bullish and bearish interpretations are found by looking for divergences, centerline crossovers and extreme readings.

Monetary Policy Monetary policy is the control of the economy by changes in the money supply, as a result of changes in the level of interest rates, and the percentage of money that banks are required to lodge with the Reserve Bank. This is as opposed to fiscal policy, which involves the level of government spending and taxation.

Money Market The money market does not take place at a central place; it is really a communications network which allows banks, money brokers, businesses, discount houses, the government and the Reserve Bank to deal with one another and arrange short term lines of credit with one another. Money brokers and discount houses conduct the market in a full time capacity, and in fact constitute the market.

Money market account Standard Bank Online Share Trading offers you an alternative to holding cash in your trading account (held with the JSE Trustees Pty Ltd otherwise known as "JSET"). This can be done by opening a Money Account with Andisa Securities. Interest earned on cash in your trading account is calculated on the average daily call rate obtained by the JSE Trustees. However for a Money Account, we have a call account with Standard Bank into which we place your funds, at better net rates. Note that the rate obtained on a Money Account is a daily call rate that may change without notification. Money Account holders will receive comprehensive details of all movements of funds, interest earned, rates obtained and fees deducted on their monthly Andisa Securities statement. The JSE requires all clients to maintain an account with JSET to ensure settlement of trades within specified times. We will automatically transfer funds from your Money Account to your JSET account to meet settlement obligations i.e. you will notice no difference to your trading account other than earning higher interest from Standard Bank on your cash balance. There is a payment fee of R4.56 (including VAT) for withdrawals made from either a Money Account or a share trading account to your bank account. There are no extra fees or charges above the standard fee for a trading account for a Money Account.

Money Supply The total amount of money in the country. There are various methods for measuring the money supply, itemised under "M1, M2 and M3".

Monopoly The situation where one business controls enough of the supply of a product or service to be able to force the price up by being the only supplier. A good example of this is De Beers, which has a virtual monopoly in the diamond market. Monopolies are discouraged in most western capitalist countries because they tend to lead to artificially high prices and inferior products. In the USA anti-trust legislation attempts to prevent monopolistic mergers and take-overs.

Morning Fix A fixing of the gold price in London at a fixing session. This is done by five leading bullion houses, by matching supply and demand to equilise at a certain price. There is also an afternoon fix.

Mortgage debenture Acknowledgement for money lent to a company against security of property, bearing a fixed rate of interest and with no concern in the profits or losses of that company.

Moving Average The most commonly used technical indicator in the world; this is often used in conjunction with other indicators. To calculate a moving average on a data stream (such as a series of daily share prices), it is necessary first to decide on its period. The shorter the period the more sensitive the signals.

MOVING AVERAGE An average of data for a certain number of time periods. It 'moves' because for each calculation, we use the latest x number of time periods' data. By definition, a moving average lags the market.

Mutual funds or unit trusts Companies specialising in the investment of funds. The public is invited to subscribe for units in the fund at a precise price, which is a true fraction of the value of all the investments held by the fund. The price of units is related to the market price of the underlying securities. Because their capital is not fixed they are known as 'open-end trusts'.

NASDAQ National Association of Securities Dealers Automated Quotations system.

NECKLINE In a head and shoulders pattern it is a line drawn across the two reaction lows (top), or two reaction highs (bottom) which occur before and after the head.

NEGETIVE DIVERGENCE When two or more averages, indicies or indicators fail to show confirming trends.

Net Current Assets A balance sheet item showing the difference between current assets and current liabilities. In most healthy companies, this difference will be positive, so that the company is always able to meet its short-term creditors from its short-term assets.

Net earnings per share after tax (EPS) Taxed profit less preference and minority shareholders' interest, divided by the number of ordinary shares issued.

Net Income Also referred to as NET PROFIT or NET EARNINGS.) The earnings of an organisation after deducting taxation and all other expenses. This is obviously an important measure of a company's performance, but you should remember to allow for the inflation rate when comparing one year's net income with another's.

Net Net asset value per share Value per share arrived at by dividing the net assets of a company, after deduction of all prior charges, by the number of ordinary shares issued. This figure is normally adjusted for the premium or discount of the market value of investments on their book value. (Its two main uses are to assess the price at which the shares of an investment company should stand having regard to the market value of its underlying assets, and to assess a possible price at which a take-over bid for the shares may be pitched.)

Net Operating income The profit of the company before the appropriations detailed in the income statement. Most income statements begin with a statement of the company's turnover, which is not arithmetically related to the rest of the income statement. The next figure is net operating income from which the interest paid extraordinary items, taxation, transfer to reserve, preference and ordinary dividends are subtracted to arrive at the retained income for the year.

New issue Initial issue of shares in a company by a public offer, a private placing, a tender bid or an exchange of shares for those of one or more other companies.

Nil Paid Letters A security which is temporarily listed on the stock exchange and which represents the right to take up the shares of a certain company at a certain price and on a certain date. Nil paid letters are the result of a rights issue to the existing shareholders (or debenture holders) of a company. A rights issue is one way of raising additional capital by offering existing shareholders the opportunity to take up more shares in the company - usually at a price well below the market price of the shares. These rights are represented by the "nil paid letter" and are renounceable - this means that they may be bought and sold on the stock exchange. You will see them from time to time on your price page. They are normally very volatile because they fluctuate according to how close the market price is to the "take-up" price.

Nominal or par value of shares Value given to shares when they are created. It has nothing to do with the true value of shares and need bear no relationship to the market price.

Nominee A company formed for the specific purpose of registering securities in its own name on behalf of other persons, and administering those holdings

Non-Controlled Client A client who appoints his own CSD participant. Non-Controlled Clients also known as a Del-pay Client in paper settled securities. These type of clients are mostly Institutional. The broking member has no input as to what this client buys and sells. The securities and funds are also not under the control of the broking member and the settlement of trades takes place via the clients CSDP. Risk managed with this type of client is a high priority.

Non-Distributable Reserve That portion of accumulated shareholders' equity, which may not be distributed in the form of dividends. The Companies Act is at considerable pains to maintain the share capital (or asset base) of a company and to prevent minority shareholders from being defrauded by the majority. Because of this, the shareholders' equity is clearly divided into two main areas - contributed (or paid-in) equity and accumulated equity.

Non-resident share-holder's tax Tax deducted by the company on behalf of the government from dividends paid to non-resident shareholders.

Non-voting shares Shares without voting rights. The issue of such shares is no longer permitted by the JSE, though existing non-voting shares are allowed to retain their listing. (N-shares).

Notes to the Accounts These form part of the annual financial statements of a company. They supply more information on the figures contained in the financial accounts, according to the requirements of the Companies Act. It is very important to consider these notes carefully before buying the shares of the company. They often contain important information, which the company has preferred to show as a note rather than in the balance sheet, income statement or flow of funds statements. For example, any change in accounting policies is contained in the first note, and these can be very important to the final profit or loss picture. Other items, which are covered, is a breakdown of investments into listed and unlisted, director's emoluments, a breakdown of fixed assets, auditors' fees, details of borrowings and so on.

OBV (On Balance Volume) The calculation is an accumulated running total of the of volume calculated from the following explanation. If the stock's share price closes above the previous day's or periods close, then all the volume traded during that period is added to the total OBV. If the stock's share price closes below the previous periods close, then all the volume traded in that period is subtracted from the total OBV.

Open Interest The total number of purchased or sold lots in a particular type of exchange traded contract that have not yet been offset, i.e. sold off or bought back.

Open Order An order still pending or on the books to buy or sell security, but not yet executed. An open order will remain in effect until it is either executed or cancelled or for a period of two weeks, at which point it lapses. If orders are required to remain open for more than two weeks, they can be placed "GTC" (good till cancelled).

Open Position Nett total of open transactions and unsettled items with the market.

Options Purchased options giving the right of conversion into shares at a fixed price and by a specified date. Options are negotiable on the JSE.

Order A commitment to buy or sell a specified quantity of a security at a set price (limit), or at best, subject to certain terms.

Ordinary Share Capital Capital of a company represented by the number of its ordinary shares.

Ordinary Shares Also sometimes called "equity" shares, these are fixed shares, which share in the profits and risks of the company. Unlike the fixed dividend paid to preference shareholders, the ordinary dividend is decided by the directors, and is dependent on the company's profits. If the company is liquidated, the ordinary shareholders share out the proceeds after the creditors and preferential shareholders have been paid out. For these reasons, ordinary share prices tend to be far more volatile than preference shares, giving opportunities for capital gains. Most of the shares published in the newspaper are ordinary shares.

OSCILLATOR An indicator that determines when a market is in an overbought or oversold condition. When the oscillator reaches an upper extreme, the market is overbought. When the oscillator line reaches a lower exteme, the market is oversold.

OTC Over-the-counter market - a market which is normally not licensed or an informal market for the trading of securities. There is therefore no formal settlement through a clearinghouse nor is risk formally managed.

Over-Subscription This occurs where the applications for a new issue of shares exceed the number of shares available for issue. This often happens because the shares are offered to the public at a price below their inherent value and people obtaining the shares can make an immediate "stagging" profit when the shares are listed

OVERBOUGHT A technical condition that occurs when prices are considered too high and susceptible to a decline.

OVERBOUGHT / OVERSOLD INDICATOR An indicator that attempts to define when prices have moved too far and too quickly in either direction.

OVERSOLD A technical condition that occurs when prices are considered too low and ripe for a rally.

PANIC The second phase of a bear market, when buyers thin out and sellers become more urgent. The downtrend of prices suddenly accelerates into an almost vertical drop, while volume rises to climactic proportions.

Paper Profits The difference between the purchase price of a share and its current market price. Another term for this is "market appreciation". There is a potential danger in this figure, because it may not be possible to sell the shares at their market price.

Par value The price for which a share was first sold to the public. Normally, the market price quickly exceeds the par value as the company grows and make profits. The objective of the par value is to enable the "asset base" of the company to be clearly established at its inception so that no illegal erosion of that base can take place.

Partly Paid Bonds or equities on which the holder has paid only part of the face value at the time of issue and is due to pay the balance in one or more instalments, usually but not always at set dates and in set amounts.

Passing a dividend Failure of a company to declare a dividend.

PENERTRATION The breaking of a boundary line, tredline, or support and resistance level

PENNANT A continuation chart pattern that is simliar to the flag, except that it is more horizontal and resembles a small symmetrical triangle. Like the flag, the pennant usually lasts from one to three weeks and is typically followed by a resumption of the prior trend.

Penny Stock Shares, which trade for, low prices per share. They may be shares of a very good company, however, they are usually not. They are attractive to private investors who do not have enough capital to purchase more expensive shares.

Percentage of profit to shareholders' funds After-tax profit of a company expressed as a percentage of the total shareholders' funds

POINT AND FIGURE CHARTING A type of chart consisting of columns of X's (showing rising prices) and O's (showing falling prices) arranged on a square grid. When the index increases, a rising column of black X's is created -- a rally. When the index falls, a descending column of red O's appears -- a decline.

Political Risk Risk which is political, rather than economic, financial or managerial. This kind of risk is very difficult to determine and can cause tremendous fluctuations in the market.

Portfolio All the securities owned by an investor.

Portfolio Manager This is someone who manages portfolios on behalf of investors. He makes the investment decisions and is not usually obliged to get his clients' permission to change their investments. He is paid a fee and sometimes a percentage of any profit he makes, and is not liable for any losses sustained by his clients.

Portfolio Structure The percentage breakdown of a portfolio over the various market sectors.

Portfolio valuation Schedule which Broking firms issue periodically (on request) to clients detailing the purchase and current prices of their share investments, the annual dividend, the yield, etc.; and comparing the overall situation with the previous valuation.

POSITION TRADING A style of trading characterized by holding open positions for an extended period of time.

Pre-listing statement Statement giving full initial information on the affairs of a company seeking a listing on the JSE.

Preference shares Shares bearing a fixed annual rate of dividend with a prior right over all ordinary shares in the distribution of dividends from annual profits; and a prior claim to repayment of capital on a winding-up of the company. Unless such shares are specifically defined as non-cumulative the company is liable for any arrears of preference dividends.

Premium A general term used to describe the difference between the price at which a share was first issued and the current price. Often, a successful company wants to issue additional shares to raise the capital for expansion. The price of these new shares will reflect the growth of the company since its incorporation and so they will be sold for more than the selling price of shares of the same class when the company was first formed. The additional amount is a share premium, and is shown separately in a share premium account.

Price earnings ratio (PE or P/E) The market price of a share divided by its earnings. It expresses the number of years' earnings (at the current rate) which a buyer is prepared to pay for a share. If the earnings per share are 10 cents and the price 100 cents, then the price earnings ration is 10:1. The ratio is, in fact, the reciprocal of the earnings yield. This ratio is also referred to as the PE ratio, the P/E ratio and the multiple.

Price lists Lists of all buyers, sellers and sales prices issued by the JSE at specific times during the day. These constitute the official records of prices.

Price Range The difference between the highest and lowest prices at which a particular share has traded over a certain time period - such as one trading day, or one year. The range is a good indication of the volatility of the share.

Primary Market The market for shares when they are first sold by a company to raise capital. New issues and rights issues are examples of activity on the primary market. Once the company has sold the shares, they enter the secondary market and are sold and bought by members of the public without in any way changing the capital structure of the company.

PRIMARY TREND see major trend

Private company Company which may not have more than 50 shareholders and which restricts the right to transfer its shares.

Private placing Shares in a new issue placed by private arrangement with clients by the sponsoring Broker and the merchant bank concerned with the issue. (The sponsoring broker must make available to other Broking firms 30 percent of his allocation of shares.)

Producing mine One that has passed the development stages and is producing and treating ore.

PROGRESSIVE STOP A stop order which follows the market up or down.

Prospectus Any document, notice, circular, advertisement or other invitation offering to the public for subscription or purchase of any shares or debentures in a company. The prospectus must contain certain information specified in the Companies Act. A prospectus must also be issued in the case of a rights issue.

PROTECTIVE STOP A stop order used to protect gains or limit losses in an existing position.

Provision An item on the balance sheet that falls under liabilities. A provision is "raised" when the company has an expense for which it has not yet received an invoice and therefore does not know the amount. The provision is an estimate, which is charged against profits because the expense was incurred in the accounting period, which is being reported

Proxy A document, which entitles one person to attend shareholders' meetings, speak and vote on behalf of another person who is a shareholder of the company.

Proxy Voting Acting or speaking for an absent shareholder on issues surrounding the management of the company at shareholders' meetings.

Public company Limited liability company, which is not a private company.

Public offer Offer made by a company to the public to subscribe to its issue of shares. The offer must be made by way of a prospectus to which a form of application is attached.

PULLBACK Return of prices to the trendline after a breakout.

Purchases on margin Shares bought but not fully paid in cash, with the purchaser making use of the credit facilities offered by some brokers.

Put option Right of a seller, upon cash payment of premium money to the buyer, to deliver all or any part of such transaction within a stated period at an agreed price.

Pyramid company Company where the major asset consists of the legal control. (I.e. 50% of the issued shares) of a company already listed. (Such a pyramid will not be considered for a listing unless the original company has been listed on the JSE for at least three years.)

Rally A temporary upturn in the price of a share or index or other data stream which occurs during an overall bear trend. The opposite of a correction.

RALLY An increase in price which retraces part of the previous price decline

Ratio The relationship between two figures from the financial statements designed to show the profitability or effectiveness of the management within a company. Ratios have no absolute significance, and are only relevant for comparisons over the history of the company or between companies in the same sector.

REACTION A decline in price which retraces part of the previous price advance

Realised Profit A profit which is actually in the bank, as opposed to a market appreciation. If you buy shares for R10 and they rise to R12 then you have a market appreciation of R2. Only if you then sell them at R12 will you have a realised profit of R2 less your dealing costs.

Recession A downturn in the economy.

RECTANGLE A continuation chart pattern where prices move sideways between two different levels for a period of time and then continue moving in the direction of the previous trend.

Redeemable Shares which can be redeemed by the company either at fixed dates and prices, or on certain specified terms at the discretion of the board.

Redemption date Date on which debentures, notes and government, municipal and statutory authority stocks are repaid.

Reduction of capital Capital of a company can be reduced because (1) it has considerable funds in excess of requirements; or (2) has sustained substantial losses, which are unlikely to be recouped. In the case of (1) the funds are paid out to shareholders and the par value of the shares is reduced. (Mining companies approaching the end of their working lives usually reduce their capital in this way.) In the case of (2) the losses are written off by reducing the par value of the shares without any payment being made to shareholders. Such capital reduction requires the consent of the courts.

Registered Owner The party registered as the owner in the Register of Members. This may be the true owner, a fund, unit trust or nominee.

Registration Entry in a company's register of the names and addresses of all beneficial shareholders who have lodged shares for this purpose. Thereafter a shareholder may receive a share certificate made out in his name and receives all circulars, reports and dividends issued by the company.

Reserve A figure from the liabilities side of the balance sheet, which is money ploughed back into the business out of profits, arising from a revaluation of assets, or money set aside for the redemption of debentures or other long-term loans. Reserves can be either distributable or non-distributable in the form of dividends. The general rule is that a company may only distribute profits, and not its capital base. Reserves arising from profits are normally distributable, as opposed to reserves arising from, e.g., a revaluation of land.

RESISTANCE LEVEL Resistance is a price level at which there is a large enough supply of a stock available to cause a halt in an upward trend and turn the trend down. Resistance levels indicate the price at which most investors feel that prices will move lower.

Retail Investor Individual investors who generally deal in smaller amounts than the professional or institutional investors.

Retained Income The entire after-tax profit of a company is seldom distributed to shareholders as a dividend. A portion is usually kept in the business to finance future growth or to act as a reserve against less profitable years. This is known as retained income and appears in both the income statement and the balance sheet.

RETRACEMENT The peaks or levels where advancing prices are halted. This represents a price level or area over the chart where selling pressure or supply overcomes buying pressure or demand As a result a price advance is halted and prices turn down again.

Return The return on an investment consists of any dividend, interest, rent or other income added to the increase in the value of the asset over a set period, usually expressed as an annualised percentage of the original investment. For example, if you bought shares for 100 cents, received a dividend of 25 cents and then sold them 6 months after the date of purchase for 1175 cents, then your return consists of 25 cents dividend, plus 175 of capital growth, which is 20% of your original investment of 1000 cents. This is 40% on an annualised basis.

Return on Capital Employed A ratio used to measure pre-tax profitability. It may be calculated as pre-tax profit plus interest paid, divided by total shareholders' funds.

Revenue reserves Appropriations made from profits to meet commitment expected to arise in the future. These, if not required, may be added back to profits earned (unappropriated profits) in subsequent years.

REVERSAL PATTERN A chart pattern that occurs before an existing trend reverses direction.

Reverse take-over Injection of assets into a company greater then its existing resources, in exchange for new shares, thus placing the control in the hands of the vendor of such assets.

Reverse yield gap A situation where the yield on equities is lower than that on bonds. Traditionally yields on equities used to be higher than on bonds and the differential was referred to as the 'yield gap'.

Rights issue Issue by a company of rights to existing shareholders to take up further shares at a specified price. Such rights, under the title of letter of rights, may be sold in the market during a prescribed period if the shareholder does not wish to take up his entitlement.

Risk The probability that a share price will go down rather than up. All investments have an element of risk which is harder to quantify than their return, and therefore very often left to "gut feel". Generally, the rule is that the more risky an investment, the higher its potential return. To understand this, it is necessary to consider what you are actually doing when you buy a share or other investment. Essentially you are in the business of forecasting. You are saying that you are buying the particular share because you believe that its price will go up.

Risk Management The science of assessing and controlling risks in order to keep them within acceptable bounds.

ROUNDING BOTTOM Also known as a saucer bottom, it is a reversal chart pattern representing a long consolidation period that turns from a bearish bias to a bullish bias.

Ruling Price The ruling price at any time is the last recorded sales price .

Safe Custody The safe keeping of the deposited securities by a custodian.

SAFIRES Southern African Financial Instruments Real Time Electronic Settlement System.

SARB South African Reserve Bank.

SATRIX The Satrix40 is an instrument introduced by the JSE to track the performance of the underlying Index (Namely the ALSI).

SATSA South African Transfer Secretaries Association

Scrip Share certificates.

Scrip dividend An award of Capitalisation shares where the shareholder will always have the election for cash.

Scrip Instructions Instructions calculated by the computer showing the receiver and deliverer of each item.

Seat The right which confers membership of Safex on the registered holder or lessee thereof

Secondary Market The market is made up of share transactions, which do not involve the company that issued the shares concerned. The primary market is where companies sell their shares to the public to raise capital.

Secondary Share A share of a company, which is well managed and has good markets, but does not have the financial muscle or history of profits of the blue chips. These are sometimes referred to as "growth" stocks, because they have the potential to become blue chips at some future stage. You should expect a secondary share to double its market price within the next 2 to 3 years, and for this reason they form an important middle area in your portfolio between blue chips and speculative shares.

SECONDARY TREND see intermediate trend

Sector A grouping of all shares in the same industry usually represented by a sector index.

Securities Stocks, shares or bonds.

Securities Transfer Tax The Securities Transfer Tax Act, 2007 (Act No. 25 of 2007) , provides for the payment of Securities Transfer Tax (STT) on the issue and on the transfer of beneficial ownership of securities which are listed on the JSE Securities Exchange (excluding debentures). The rate of tax is 0,25% of the issue price or selling price of the securities. In addition, Securities Transfer Tax is not payable in respect of the buy-back of its own shares by a listed

Securities, fixed interest bearing Securities on which a fixed rate of interest is paid each year.

Segregated Account An account that separately identifies an investor's securities and does not depend entirely on records maintained by the investor's custodian or service providers

Seller's price Price at which a dealer is prepared to sell shares on the market.

SELLING CLIMAX A period of extraordinary volume which comes at the end of a rapid and comprehensive decline which exhausts the margin reserves of many speculators or patience of investors.

Selling short Selling shares you do not possess in the expectation of being able to buy them at a lower price before they are due for delivery. Theoretically, the potential loss is limitless since the share price can rise to any level. (By law, all bear sales have to be disclosed as such, a scrip borrowing agreement needs to be in place.

Sentiment The mood of the market. The way that investors as a group perceive a share sector or the market as a whole - are they bullish or bearish?

Settlement Date In the STRATE environment, where all deals are settled electronically, the settlement date is 5 days after the trade has taken place.

SHAKEOUT A situation where many scared investors exit their positions due to unfavorable news or uncertainty regarding the stock or industry. The dot-com bust was characterized by numerous shakeouts causing many to abandon their dot-com positions, often at great losses.

Share capital Capital of a company represented by different kinds of shares.

Share certificate Document issued to a shareholder by a company certifying ownership of a stipulated part of the assets of the company.

Share Code A unique code will be assigned to each listed security. The code will be up to 6 characters in length.

Share split Increase in the number of authorised and issued shares in a company without an increase in the capital. The number of shares held by each investor increases in direct proportion to the overall increase in the issued share capital without any change in the total nominal value. (Share splits usually take place when a company's shares reach a price level that puts them beyond the reach of the average investor.)

Share Transactions Totally Electronic (STRATE) An electronic settlement system for the South African equities market.

Short Position The result of a trader having sold more than he has bought in any particular market/commodity/instrument/contract.

Sideways movement Slight, continuing up and down movements in share prices, with no definite trend evident

Special bargain Transaction which is beyond the capacity of the market at the prevailing price.

Sponsoring broker Broking member of the JSE who must be nominated by a company seeking a listing to act as a liaison between the company and the listings department or committee.

Spot (or cash market) A transaction involving immediate settlement, or the soonest standard settlement in that market. For example, the spot date in the foreign exchange market, is normally two business days after the date of the deal.

Stag Person who applies for shares in a new company with the object of selling them immediately dealings commence (hopefully at a profit).

Stale bull Person who has held shares longer than anticipated because they have not reached the price at which he hoped to sell.

Stamp Duty A tax paid by the transferee on registration of shares in his/her name. No stamp duty is payable if MST has been paid.

Stock exchange Licenced market for the buying and selling of listed securities.

Stock Exchange Licence Licence issued by the government to an institution which operates for the sole purpose of marketing securities in public companies. It must be renewed annually.

Stock Exchange News Service (SENS) The Stock Exchange News Service (SENS) is a service provided by the JSE Securities Exchange. It is news items as released by JSE listed companies that may affect those companies share prices. News items include cautionary announcements, financial results, director dealings and trading updates.

Stock Exchanges Control Act 1 of 1985 (as amended) South African Act of Parliament that defines the conditions under which a stock exchange must operate. The Act is administered through the Financial Services' Board statutory body.

Stocks Ordinary share capital can be divided either into units of stock or into shares. The terms in this context are synonymous.

Stocks and shares Capital of a company. There are two main types of shares or stock: those with a fixed dividend (preference shares) and those with a fluctuating dividend (ordinary shares, or equities).

Stop Loss Stop losses are used to protect wealth by automatically placing a sell order for your shares when the price of your share drops below a threshold set by you. There are two types of stop losses.
Fixed price stop loss - Creates a sell order - on your behalf - when a fixed price level is crossed by the current ruling price.
Trailing Price stop loss - Creates a sell order - on your behalf - when a variable price level is crossed by the current ruling price. The variable price level trails the high of the share's ruling price by a fixed amount or a percentage.

STP Straight Through Processing

Strike price Price at which the security under option will change hands should the option be exercised, with particular reference to 'call' and 'put' options.

Sub Division Also known as a share split, a sub division involves an increase in the number of shares held by each member, with a proportionate reduction in their value so that there is no change in the total value of the shareholding. Breaking each share down into smaller pieces does this. The effect is to bring the shares within reach of smaller investors. This normally results in a greater demand for the shares.

Subsidiary company A company at least 30% of whose issued shares is held directly or indirectly by a holding company.

SUPPLY Amount of stock available at a given price

SUPPORT LEVEL The troughs or levels where declining prices are halted. This represents a price level or area under the chart where buying pressure or demand overcomes selling pressure or supply. As a result a price decline is halted and prices turn up again.

Suspended Share A share that the Committee has suspended from trading for period of the time. Usually, this occurs where some material event is about to occur which will drastically effect the share price. Until this information is made public, trading is suspended to prevent insiders from buying or selling the shares illegally.

SYMMETRIACAL TRIANGLE A sideways chart pattern between two converging trendlines in which the upper trendline is declining and the lower trendline is rising. This pattern represents an even balance between buyers and sellers, although the prior trend is usually resumed. The breakout through either trendline signals the direction of the price trend.

Synergy This is a fashionable word to denote gains made in addition to the sum total of the parts when two business concerns are jointed. The basis of the concept is the experience that in some mergers the net advantages that accrue to one firm need not come at the expense of the other: both parties may gain

Tainted Scrip Scrip which has been tampered with, thus misrepresenting genuine proof of ownership.

Take-up Holder of Rights Offer letters/documents lodge these letters/documents together with payment in acceptance of the Rights Offer before the Offer Closing Date.

Taking a View This phrase has two meanings. Firstly, it can refer to an investor taking a bullish or bearish view of the market depending on whether he believes market trends will rise or fall -usually this would be reflected in his transaction. Secondly, it can refer to the length of time that one intends to keep a share - shares can be bought with a short, medium or long-term view.

Tax Treaty An agreement or treaty between two countries intended to avoid double taxation of income.

TECHNICAL ANALYSIS Technical analysis is the study of market action, primarily through the use of charts, for the purpose of forecasting future price trends.

Terms of Issue Terms issued by the warrant issuer in conjunction with the Offering Circular and sets out the contractual arrangements between the Warrants Issuer and the Warrant Holder.

The Total Return Indices (TRI's) The Total Return Indices (TRI's) measure total return on the underlying indices, combining both capital performance and reinvested income. The TRI's are calculated using declared dividends. Although in reality there is a timing delay between the xd date and the receipt of dividends (payment date), it is considered preferable to assume all income is reinvested on the xd date rather than incur the complications of allowing a time lag before (I) reinvestment of the net dividends, and (ii) different and uncertain time lag before reinvestment of any tax reclaimed.

Tick Size The specified parameter or its multiple by which the price of a selected security may vary when trading at a different price from the last price, whether the movement is up or down from the last price

Tightly Held Shares which are difficult to obtain because the owners are reluctant to part with them. These shares are easy to spot because they have little or no volume traded. Generally, it is not a good idea to deal in such shares.

Time bargain Transaction which must be concluded within a specific time. (The seller is responsible to the buyer for any rights and/or dividends that accrue between sale and delivery.)

Time decay Time decay (Theta) measures the rate of reduction in the price of a warrant resulting from the passage of time. In other words, it is the part of a warrants premium that is not intrinsic value. A warrants value will decline at an increasing rate as expiration nears. Theta is defined as a warrants sensitivity to the passage of time and is expressed as the expected percentage change in the price of a warrant over a week.

Time Value That portion of a warrant's value related to the time remaining until expiry of the warrant.

Tip Sheet A newsletter which concentrates on giving its readers tips on which share to buy and sell and when to transact. Such letters should be followed with caution, and their advice used only in conjunction with your own research.

To Redemption The annual value of the coupon rate on a fixed interest security, allowing for the capital difference which will be gained or lost on maturity and assuming that the interest is compounded.

Top The highest point on a share price or other graph over a defined period.

Total profits Profits before tax and before interest.

Total profits ratio 'Total profits' divided by 'total capital employed' and expressed as a percentage. (A rough measure of the return earned by a company on its resources.)

Tradability The ease with which a share can be traded. Some shares are free dealing and highly tradable, others are tightly held.

Trade A match of buy and sell.

Trade date The date on which a sell or buy transaction is executed. Trade date usually signifies the intended transfer of ownership of the securities and entitlements to the buyer. Also known as 'T' day.

Trade Matching Matching by JET of buy and sell orders entered by JSE member firms

Transfer deed signed in blank Transfer form on which portion A, giving details of the registered owner of the shares, is signed by the seller (transferor), and portion B, relating to the transferee, is left blank. (Share certificates attached to a transfer deed thus signed are negotiable documents and should be safely stored - preferably in a bank.)

Transfer form/deed Legal document transferring the ownership of shares. A transfer form, duly completed by the seller, must accompany a share certificate when it is lodged with the company on behalf of the purchaser for registration of the shares into his name.

Transfer office Office which handles the transfer of shares from one shareholder to another.

Transferee Person or body to whom shares have been sold. (This name is filled in on portion B of the transfer deed.)

Transferor Registered shareholder who is selling or transferring the shares out of his/her name.

Transmuted listing statement Information which has to be published by a company when its trading character has changed since the granting of the initial listing, or where it has acquired a major asset

TRENDLINE Straight lines drawn on a chart below reaction lows (in an uptrend) or above rally peaks (in a downtrend) that determine the steepness of the current trend. The breaking of a trendline usually signals a trend reversal.

TRIPLE BOTTOM A price pattern with three prominent troughs, all three troughs occur at about the same level.

TRIPLE TOP A price pattern with three prominent peaks, all three peaks occur at about the same level.

Uncertificated securities tax (UST) The Uncertificated Securities Tax Act, 1998, provides for the payment of uncertificated securities tax (UST) on the issue and on the transfer of beneficial ownership of securities which are listed on the JSE Securities Exchange (excluding debentures). The rate of tax is 0,25% of the issue price or selling price of the securities. In addition, uncertificated securities tax is not payable in respect of the buy-back of its own shares by a listed company. Warrant issuers and registered brokers are also exempt.

Underlying The commodity/asset/financial instrument on which a derivative is based. For example, in the case of an option, the product which the buyer/holder has the right to buy/sell.

Underlying Asset The share, shares, commodity, currency or index subject to purchase or sale upon exercise of the warrant.

Underwriting an issue Guarantee to purchase any shares in a new issue or rights issue not fully subscribed by the by the public.

Undistributed profits tax Additional tax levied on that portion of a company's profits that have not been distributed to shareholders.

Undistributed, accumulated or unappropriated profi That portion of net distributable profits left in the company after the payment of dividends and the appropriation to reserves as represented by the balance on the appropriation account.

Unlisted stocks Stocks or shares of companies which are not listed on an exchange

Unmatched deal Market deal where the information given to the clearinghouse by the buying and the selling brokers do not match. (Such deals are returned to the market for correction.) This was only possible in a manual trading system. It does not occur in electronic trading systems - such as JET.

Unsecured loan stock Stock issued for money lent to a company without security and bearing a fixed annual rate of interest. (In the event of liquidation holders of such stock rank with other creditors.)

Upside Potential A term used to describe a transaction made at a price higher than the preceding transaction price. Also called a plus tick.

VCM Venture Capital Market. In addition to the Main Board, the JSE created the DCM in 1989. The establishing of this board was to address the need to assist companies specialising in venture capital projects (venture capital conglomerates) or single venture companies. The listing requirements for a VCM listing are less onerous than those of the Main Board but still demand quality and stability.

Volatility The degree to which a share deviates from its average. High volatility is associated with risk, both fundamental and technical. For example, shares in marginal gold mines are extremely volatile often moving 10% or more in a single day, because their operations are only just profitable or unprofitable so that their performance is highly geared to the gold price.

Volatility A measure of the variation in a price over time.

VOLATILITY A measure of a stock's tendency to move up or down in price, based on its daily price history over the latest 12 month period.

VOLUME The number of trades in a security over a period of time. On a chart, volume is usually represented as a histogram (vertical bars) below the price chart.

Volume The number of shares changing hands during the trading day. In America, this figure is calculated by adding shares bought to shares sold - in other words, it is effectively double the volume traded, as it would be shown on the J.S.E. In London the volume traded is not disclosed, so that the various indicators which rely on volume cannot be used. You should keep a careful lookout for exceptional volumes on a share, because they can give a clue about insider trading and special situations.

Volume Weighted Average Price - VWAP The Volume Weighted Average Price (VWAP) is calculated by adding up the value traded for every transaction (price times shares traded) and then dividing by the total shares traded for the period.

Voluntary liquidation Non-compulsory winding up of a company

Warrant Code A six letter code assigned to a warrant by JSE to identify it on JET.

Warrant Holder The owner of a warrant.

Warrant Issuer The institution who issues the warrant.

Warrants The right to purchase or sell shares (the underlying security) at a specified date in the future and at a specified price.

Wasting asset Asset that diminishes in value as it is exploited. All mines are wasting assets because sooner or later the payable minerals in the deposit will be exhausted.

WEDGE A reversal chart pattern characterized by two converging trendlines that connect at an apex. The wedge is slanted either downwards or upwards demonstrating bullish or bearish behavior respectively.

Widening prices Increasing difference between buyers' and sellers' prices. (Usually indicates a drop in market activity.)

Working Capital The money which is tied up in the workings of the company. Usually calculated by adding the company's debtors, stock and cash balances, and subtracting its creditors and other current liabilities. Most companies try to keep their working capital to a minimum because it ties up money which could be used for other activities and which incurs interest.

Write-down Devaluation of assets for some or other reason, one such as damage

Write-off An accounting term for reducing the value of an asset to zero for some reason such as damages or complete obsolescence.

Writer The original seller of an option. The writer is required to fulfil the terms of the option at the choice of the holder

Yield This is the return on an investment.

Yield curve This is a graph showing a relationship of short-term interest to long-term interest rates. When Long-term rates are above short-term; This will be upward sloping. Long-term rates are lower than the short-term rates the curve will have a downward slope.

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