Naija Investing Hub’s Investor Dictionary
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Stocks
Shares representing ownership in a company, giving holders a claim on part of the company’s assets and earnings.
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Stock Market
A marketplace where stocks and other securities are bought and sold, providing a platform for companies to raise capital.
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Asset
A resource with economic value owned by an individual or entity, expected to provide future benefits.
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Digital Asset
An asset that exists only in digital form, such as cryptocurrencies, tokenized assets, or digital contracts.
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Options
Contracts that grant the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price within a certain timeframe.
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Invest
To allocate money or resources with the expectation of generating income or profit over time.
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Trade
The act of buying or selling financial instruments such as stocks, bonds, or commodities, often for profit.
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Investor
An individual or entity that allocates capital to financial instruments, assets, or businesses with the goal of earning a return.
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Trader
A person who actively buys and sells financial instruments, often focusing on short-term price movements.
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Stockbroker
A professional who facilitates the buying and selling of securities on behalf of clients in exchange for a commission or fee.
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SEC (Securities and Exchange Commission)
The regulatory body responsible for overseeing the securities market and protecting investors in Nigeria.
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NGX (Nigerian Exchange Group)
The main securities exchange in Nigeria, providing a platform for trading equities, bonds, and other financial instruments.
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ASI (All Share Index)
A benchmark index that tracks the performance of all stocks listed on the Nigerian Exchange (NGX).
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Index
A statistical measure that represents the performance of a specific group of securities or a market as a whole.
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Shares
Units of ownership in a company that entitle the holder to a proportion of the company’s profits and assets.
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Asset Class
A group of investments with similar characteristics, such as equities, fixed income, or real estate.
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Dividend
A portion of a company’s earnings distributed to shareholders, usually in cash or additional shares.
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Dividend Yield
A financial ratio that shows how much a company pays in dividends relative to its share price, expressed as a percentage.
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FMCG (Fast-Moving Consumer Goods)
Products that are sold quickly and at relatively low cost, such as food, beverages, and personal care items.
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Market Capitalization (Market Cap)
The total market value of a company’s outstanding shares, calculated as share price multiplied by shares outstanding.
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Ticker Symbol
A unique series of letters assigned to a publicly traded company’s stock for identification purposes.
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Price-to-Earnings (P/E) Ratio
A valuation metric that compares a company’s share price to its earnings per share (EPS).
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Portfolio
A collection of financial investments like stocks, bonds, and other assets owned by an individual or institution.
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Fundamentals
The basic financial and operational data used to evaluate a company’s value, such as revenue, profit, and assets.
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Technical Analysis
A method of evaluating securities by analyzing historical price charts and trading volumes.
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Return on Equity (ROE)
A measure of financial performance calculated by dividing net income by shareholder equity, indicating profitability.
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Cryptocurrency
A decentralized digital currency that uses cryptography for secure transactions, such as Bitcoin or Ethereum.
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Sector
A group of companies that operate in the same industry, such as technology, healthcare, or energy.
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Exchange Traded Fund (ETF)
A type of investment fund that trades on stock exchanges, holding assets like stocks, bonds, or commodities.
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Free Float
The proportion of a company’s shares available for public trading, excluding restricted or insider-owned shares.
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Growth Stocks
Shares of companies expected to grow earnings at an above-average rate compared to the overall market.
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Blue-Chip Stocks
Shares of well-established companies with a history of reliable performance and strong market presence.
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Value Stocks
Stocks trading at a lower price relative to their fundamentals, often considered undervalued by the market.
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Magnificent 7
A reference to seven high-performing companies dominating their sectors, similar to dominant stocks in the Nigerian market such as MTNN and Dangote Cement.
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Equity
Ownership interest in a company, represented by shares of stock.
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Book Value
The net value of a company’s assets as recorded in its balance sheet, calculated as assets minus liabilities.
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Beta
A measure of a stock’s volatility in relation to the overall market.
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Liquidity
The ability to quickly buy or sell an asset without significantly affecting its price.
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Bull Market
A financial market characterized by rising asset prices, often driven by investor confidence.
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Bear Market
A financial market characterized by falling asset prices, often driven by investor pessimism.
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IPO (Initial Public Offering)
The first time a company offers its shares to the public in exchange for capital.
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Sector Leaders
Top-performing companies within a specific sector, such as Dangote Cement in Nigerian construction.
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Non-Performing Loan (NPL)
A loan that is in default or close to default due to missed payments.
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Debt Market
A financial market where debt securities, such as bonds, are issued and traded.
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Foreign Portfolio Investment (FPI)
Investments made by foreign investors in Nigerian securities like stocks and bonds.
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Fixed Income
Investments that provide regular, fixed returns, such as bonds and treasury bills.
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Green Bonds
Debt instruments issued to fund environmentally friendly projects, including renewable energy initiatives in Nigeria.
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Trading Volume
The total number of shares traded in a specific period, often used as a measure of liquidity.
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Volatility
A measure of the price fluctuation of a financial asset, indicating its risk level.
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Mutual Fund
An investment vehicle pooling funds from investors to buy diversified securities such as stocks and bonds.
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Over-the-Counter (OTC)
Securities traded directly between parties, rather than on an organized exchange like the NGX.
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Yield
The income generated from an investment, often expressed as a percentage of the investment’s cost.
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Corporate Governance
The system of rules and practices that ensures a company is managed in the best interest of stakeholders.
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Rights Issue
An offer to existing shareholders to purchase additional shares at a discount, often to raise capital.
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eNaira
Nigeria’s official digital currency issued by the Central Bank of Nigeria, designed to complement physical cash and facilitate secure, fast payments.
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Accelerated Book Building
A fast-track method of raising capital where investors bid on shares within a short period.
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Active Share
A measure of how much a portfolio’s holdings differ from its benchmark index.
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Asset Revaluation
The process of adjusting the book value of an asset to reflect its current market value.
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Average Cost Method
An inventory valuation method where the cost of goods is calculated as the weighted average of all inventory costs.
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Balance of Payment Deficit
A situation where a country imports more goods, services, and capital than it exports.
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Blockchain
A decentralized digital ledger that records transactions across many computers securely and transparently.
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Bridge Financing
A short-term loan used to cover immediate needs before securing permanent financing.
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Callable Bond
A bond that allows the issuer to redeem it before its maturity date.
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Capital Expenditure (CapEx)
Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
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Capital Loss
The loss incurred when a capital asset is sold for less than its purchase price.
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Carrying Value
The value of an asset in a company’s accounting records, typically its purchase price minus depreciation.
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Central Bank Rate
The interest rate set by the Central Bank of Nigeria to regulate lending between commercial banks.
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Commodity Exchange
A marketplace for trading commodities such as oil, gold, and agricultural products, such as the Lagos Commodities and Futures Exchange (LCFE).
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Contingent Liability
A potential financial obligation that depends on the outcome of a future event.
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Cost of Capital
The cost of a company’s funds, including the cost of debt and equity financing.
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Cryptocurrency
A digital or virtual currency secured by cryptography, enabling secure online transactions.
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Current Ratio
A liquidity ratio that measures a company’s ability to pay short-term obligations with its current assets.
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Debt Equity Ratio
A measure of a company’s financial leverage, calculated by dividing total liabilities by shareholder equity.
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Discount Bond
A bond sold for less than its face value, with the difference representing the yield to maturity.
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Dual Listing
The practice of a company being listed on more than one stock exchange, such as Seplat Energy on both the NGX and LSE.
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Economic Diversification
A strategy aimed at reducing Nigeria’s dependency on oil by growing other sectors like agriculture and technology.
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Environmental Impact Bonds
Bonds issued to fund projects aimed at improving environmental sustainability and addressing climate change.
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Ex-Rights Date
The cutoff date on or after which a buyer of a stock is not entitled to participate in a rights issue.
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Feasibility Study
An analysis to determine the viability of a project or investment before committing resources.
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Fixed Asset
A tangible, long-term asset used in the production of goods and services, such as machinery or buildings.
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Forward Guidance
A central bank’s communication about the likely direction of monetary policy in the future.
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Free Reserves
The amount of funds that commercial banks hold in excess of the Central Bank’s reserve requirements.
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Green Finance
Financial investments aimed at sustainable development projects, such as renewable energy and environmental conservation.
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Impact Investing
An investment strategy focused on generating measurable social or environmental impact alongside financial returns.
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Income Bond
A bond that pays interest only if the issuer has sufficient earnings to cover the payments.
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Infrastructure Bonds
Bonds issued to fund public infrastructure projects, such as roads, power plants, and railways.
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Initial Public Offering (IPO)
The first sale of a company’s shares to the public, marking its debut on the stock exchange.
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Investment Grade
A rating given to bonds that are considered low risk and suitable for investment.
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Key Performance Indicators (KPIs)
Quantifiable metrics used to evaluate the performance of an individual, project, or company.
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Liquidity Coverage Ratio (LCR)
A requirement for banks to hold enough liquid assets to cover net cash outflows for 30 days.
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Monetary Policy Committee (MPC)
A committee of the Central Bank of Nigeria responsible for setting interest rates and monetary policy.
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Non-Performing Loan (NPL)
A loan that is in default or close to being in default due to missed payments.
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Overdraft Facility
A credit arrangement allowing individuals or businesses to withdraw more money than is available in their account.
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Preferred Stock
A class of ownership in a corporation with a fixed dividend that takes precedence over common stock dividends.
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Accelerated Depreciation
A depreciation method that expenses an asset’s cost faster in the early years of its life.
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Acquisition
The process of one company purchasing most or all of another company’s shares to gain control.
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Ad Valorem Tax
A tax based on the assessed value of an item, such as property or goods.
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Aftermarket
Trading of shares after an initial public offering (IPO) has occurred.
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Annual Percentage Yield (APY)
The total return earned on an investment or deposit over a year, expressed as a percentage.
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Appraisal
An evaluation of an asset’s market value, often conducted by a professional appraiser.
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Asset Turnover
A measure of a company’s efficiency in using its assets to generate sales revenue.
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Automated Clearing House (ACH)
An electronic network for processing financial transactions, including direct deposits and payments.
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Balance of Trade
The difference between a country’s exports and imports of goods and services.
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Bank Rate
The interest rate set by the Central Bank of Nigeria (CBN) for lending to commercial banks.
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Bilateral Trade Agreement
An agreement between two countries to facilitate trade and reduce barriers like tariffs.
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Bond Duration
A measure of a bond’s sensitivity to interest rate changes, expressed in years.
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Capital Adequacy
A measure of a bank’s financial strength, ensuring it has enough capital to cover its risks.
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Capital Market Authority (CMA)
A regulatory body that oversees the issuance and trading of securities in Nigeria.
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Commodity Futures
Contracts to buy or sell a commodity at a predetermined price at a future date.
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Compulsory Acquisition
The government-mandated acquisition of private property for public use, with compensation provided.
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Consolidation
The process of merging multiple businesses into a single, larger entity.
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Credit Risk
The risk of a borrower defaulting on a loan or failing to meet contractual obligations.
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Currency Arbitrage
The simultaneous purchase and sale of currencies to profit from exchange rate differences.
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Debt Instrument
A financial instrument representing a loan made by an investor to a borrower.
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Deferred Revenue
Payments received in advance for goods or services to be delivered in the future.
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Derivative
A financial contract deriving its value from an underlying asset, index, or interest rate.
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Discount Rate
The interest rate used in discounted cash flow (DCF) analysis to determine present value.
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Economic Moat
A company’s competitive advantage that protects its profitability and market share over time.
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Enterprise Resource Planning (ERP)
Software used by companies to manage business processes and integrate operations.
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Exchange Control Regulations
Rules governing the buying and selling of foreign currencies in Nigeria.
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Fiscal Policy
Government policies on taxation and spending to influence economic activity.
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Fixed Rate Bond
A bond that pays the same interest rate over its entire term.
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Free Trade Zone (FTZ)
A designated area in Nigeria where goods can be imported, manufactured, and re-exported without customs regulations.
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Gross Margin
The difference between a company’s revenue and cost of goods sold (COGS), expressed as a percentage of revenue.
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Guaranteed Investment Contract (GIC)
An agreement where an insurer guarantees a fixed return on an investment for a specified period.
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Import Duty
A tax levied on goods brought into Nigeria to regulate trade and generate revenue.
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Index Tracking
A passive investment strategy that aims to replicate the performance of a market index.
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Industrial Bonds
Bonds issued by companies in the industrial sector to finance operations and projects.
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Leverage Ratio
A measure of the level of a company’s debt compared to its equity or assets.
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Loan Syndication
A process where multiple lenders jointly provide a loan to a single borrower.
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Margin Call
A broker’s demand for an investor to deposit more funds to maintain a leveraged position.
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Price-Earnings Growth (PEG) Ratio
A valuation metric that adjusts the P/E ratio for a company’s expected earnings growth.
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Public-Private Partnership (PPP)
A cooperative agreement between the government and private sector to finance and manage public projects.
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Zero-Based Budgeting
A budgeting method where all expenses must be justified for each new period, starting from zero.
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Active Investing
An investment strategy where the investor actively buys and sells securities to outperform a market index.
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Alternative Assets
Investments outside traditional categories such as stocks and bonds, including real estate and private equity.
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Amortizing Loan
A loan where the principal and interest are paid down through regular payments over time.
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Anchor Borrowers Program (ABP)
A Nigerian initiative by the CBN to provide loans to smallholder farmers.
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Ask-Bid Spread
The difference between the lowest ask price and the highest bid price in a market.
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Backtesting
A process for testing a trading strategy using historical data to determine its effectiveness.
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Balance Sheet Recession
An economic downturn caused by high levels of private sector debt.
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Bearer Bonds
Bonds not registered in the investor’s name, with ownership determined by physical possession.
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Beta Coefficient
A measure of a stock’s volatility compared to the overall market.
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Bogus Receivables
False or inflated accounts receivable entries on a company’s financial statements, often a sign of fraud.
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Central Bank Digital Currency (CBDC)
A digital form of fiat currency issued by a central bank, like Nigeria’s eNaira.
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Commercial Bank
A financial institution that accepts deposits, offers loans, and provides other financial services.
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Consumer Price Index (CPI)
A measure that examines the average change in prices paid by consumers for goods and services over time.
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Corporate Bond
A debt instrument issued by a corporation to raise capital.
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Coupon Yield
The annual interest rate paid by a bond, expressed as a percentage of its face value.
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Currency Depreciation
A decrease in the value of a currency relative to other currencies in a floating exchange rate system.
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Dark Pool
A private financial exchange where trades are conducted anonymously to reduce market impact.
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Deflation
A decrease in the general price level of goods and services in an economy over a period.
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Development Finance Institution (DFI)
An organization that provides long-term financing for projects promoting economic growth, such as the Bank of Industry in Nigeria.
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Direct Market Access (DMA)
A service enabling investors to trade securities directly on an exchange without using brokers.
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Discount Window
A tool through which central banks lend money to commercial banks, often during liquidity shortages.
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Downgrade
A reduction in the credit rating of a company, country, or financial instrument, signaling higher risk.
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Elasticity of Demand
A measure of how sensitive the quantity demanded of a good is to a change in price.
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Employee Stock Ownership Plan (ESOP)
A program allowing employees to own shares in their company, often at discounted rates.
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Environmental, Social, and Governance (ESG)
Criteria for evaluating a company’s ethical impact and sustainability practices.
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Eurobond
A bond issued in a currency other than the currency of the country in which it is issued, often used by Nigerian companies to access foreign markets.
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External Reserves
Foreign assets held by the Central Bank of Nigeria, used to stabilize the naira and manage trade.
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Factor Investing
An investment strategy focusing on specific drivers of returns, such as value, growth, or momentum.
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Federal Allocation
The distribution of revenue from Nigeria’s federal government to states and local governments.
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Fixed Overheads
Costs that do not change with production levels, such as rent or salaries.
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Foreign Exchange Market (Forex)
A global marketplace for trading national currencies, critical in managing the naira exchange rate.
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Gilt-Edged Securities
High-grade bonds issued by governments or reputable corporations, considered low risk.
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Green Bonds
Bonds specifically used to finance environmentally friendly projects, such as Nigeria’s green infrastructure initiatives.
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Haircut
A reduction in the value of an asset, often applied during debt restructuring or margin calls.
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Hedge Fund
An investment fund using advanced strategies to maximize returns for high-net-worth investors.
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Hyperinflation
An extremely high and typically accelerating inflation rate, which can destabilize an economy.
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Import Substitution
An economic policy aiming to reduce foreign dependency by producing goods domestically, widely used in Nigeria.
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Initial Coin Offering (ICO)
A fundraising method using cryptocurrencies, where investors receive tokens in exchange for their investment.
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Junk Bond
A high-risk, high-yield bond with a low credit rating.
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Adjusted Closing Price
A stock’s closing price that has been modified to include dividends, splits, and other adjustments.
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Agency Theory
A concept in corporate governance that addresses conflicts between managers and shareholders.
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American Depositary Receipt (ADR)
A certificate issued by a U.S. bank representing shares in a foreign company.
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Annualized Return
The average yearly return of an investment over a given period.
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Asset Backed Securities (ABS)
Financial securities backed by assets like loans, leases, or receivables.
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Bank Verification Number (BVN)
A unique identifier in Nigeria used to unify an individual’s banking information.
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Base Year
A reference year used as a benchmark for economic or financial comparisons.
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Bear Spread
An options strategy designed to profit from a decline in the price of an underlying asset.
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Bond Yield
The return an investor receives from a bond, expressed as a percentage of its current price.
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Book Closure
The date on which a company closes its register of members to determine eligible shareholders for dividends or bonuses.
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Capital Importation
The inflow of foreign capital into a country’s economy, such as investments in Nigeria.
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Cash Reserve Ratio (CRR)
The percentage of a bank’s deposits that must be kept in reserve with the Central Bank.
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Certificate of Capital Importation (CCI)
A document issued in Nigeria to foreign investors to facilitate repatriation of investments and dividends.
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Common Stock
A type of equity security representing ownership in a corporation and a claim on part of the profits.
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Contract Note
A document provided by a broker to an investor, detailing the terms of a trade.
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Counterparty Risk
The risk that the other party in a financial transaction will default on its obligations.
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Cross Currency Exchange Rate
The exchange rate between two currencies, neither of which is the U.S. Dollar.
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Crowdfunding
A method of raising capital through small contributions from a large number of people, often online.
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Custodian
A financial institution that holds and safeguards a firm’s or investor’s securities.
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Debt-to-Income Ratio
A measure of an individual’s ability to manage debt, calculated as total debt payments divided by income.
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Delisting Process
The steps involved when a company voluntarily or involuntarily removes its stock from a stock exchange.
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Derisking
The process of reducing the risk exposure in a portfolio, often by diversifying investments.
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Dividend Cover
A ratio indicating the number of times a company can pay dividends to shareholders out of its profits.
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Economic Recession
A period of economic decline marked by reduced trade and industrial activity, often accompanied by high unemployment.
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Efficient Market Hypothesis (EMH)
A theory that states asset prices fully reflect all available information, making it impossible to outperform the market consistently.
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Enterprise Value (EV)
A measure of a company’s total value, including market capitalization, debt, and cash.
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Escalation Clause
A contract provision allowing for an increase in prices or rates under specified conditions.
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Fair Market Value
The price at which an asset would trade in a competitive auction setting.
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Federal Inland Revenue Service (FIRS)
Nigeria’s agency responsible for assessing and collecting taxes.
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Fixed Deposit
A financial instrument provided by banks offering a fixed interest rate for a specific term.
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Foreign Direct Investment (FDI)
Investments made by a foreign entity into a company or infrastructure in Nigeria.
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Front-End Load
A fee charged upfront for purchasing shares in a mutual fund.
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Government Securities
Debt instruments issued by the Nigerian government to finance its operations and projects.
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Holding Period Return (HPR)
The total return earned from holding an investment over a specific period.
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Initial Margin
The minimum amount of equity required to enter a leveraged position, such as futures contracts.
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Islamic Bonds (Sukuk)
Sharia-compliant bonds offering returns to investors without interest, widely used in Nigeria.
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Market Depth
The volume of buy and sell orders for a security at various price levels.
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Over-the-Counter Derivatives
Customized financial instruments traded directly between parties rather than on an exchange.
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Real Interest Rate
The interest rate adjusted for inflation, reflecting the real cost of borrowing or return on investment.
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Active Portfolio Management
An investment strategy involving frequent buying and selling to outperform the market index.
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Aggregate Demand
The total demand for goods and services in an economy at a specific price level and time period.
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Aggregate Supply
The total supply of goods and services produced within an economy at a specific price level and time period.
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Amortization
The gradual repayment of a loan over time, typically through scheduled payments.
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Asset Management Company (AMC)
A company that manages pooled funds from investors to invest in securities, such as mutual funds.
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Automatic Stabilizers
Economic policies or programs that offset fluctuations in a country’s economic activity without additional intervention.
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Balance of Payments (BOP)
A record of all economic transactions between the residents of a country and the rest of the world.
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Base Currency
The first currency listed in a currency pair, such as the Nigerian Naira in NGN/USD.
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Blue-Chip Companies
Well-established companies with a history of reliable financial performance and stability.
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Bonds Market
A financial marketplace where participants can issue, buy, or sell debt securities.
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Bookrunner
The primary underwriter or lead manager in the issuance of new equity or debt securities.
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Cash Flow Statement
A financial statement showing how cash is generated and used during a specific time period.
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Certificate of Occupancy (C of O)
A legal document in Nigeria that certifies land ownership and property rights.
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Clearing Price
The market price at which the quantity supplied equals the quantity demanded.
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Collateral
Assets pledged by a borrower to secure a loan or debt obligation.
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Credit Default Swap (CDS)
A financial contract that allows an investor to swap or offset their credit risk with another party.
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Credit Rating
An assessment of the creditworthiness of an individual, company, or government.
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Currency Peg
A system in which a country’s currency value is fixed relative to another currency, like the USD.
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Current Account
A section of the balance of payments that records a nation’s transactions in goods, services, income, and current transfers.
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Debt Restructuring
A process used by companies or governments to reorganize their debt obligations.
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Derivative Contracts
Financial contracts whose value is based on an underlying asset, index, or rate.
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Discounted Cash Flow (DCF)
A valuation method estimating the present value of expected future cash flows of an investment.
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Dollar-Cost Averaging
An investment strategy where an investor regularly invests a fixed amount of money into a particular asset.
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Economic Diversification
A strategy for reducing dependence on a single economic sector, common in resource-reliant countries like Nigeria.
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Exchange Control
Government-imposed restrictions on the buying or selling of foreign currencies in Nigeria.
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Fair Value
The estimated value of an asset, based on its current market price or intrinsic value.
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Fiscal Deficit
The shortfall between a government’s total revenue and total expenditure.
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Floating Exchange Rate
A currency exchange system where the value of the Nigerian Naira is determined by the market.
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Foreign Portfolio Investment (FPI)
Investments by foreign entities in Nigerian securities like stocks and bonds.
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Gross National Product (GNP)
The total value of goods and services produced by a country’s residents, including abroad, over a time period.
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Hostile Takeover
An acquisition attempt by a company or investor that the target company’s board rejects.
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Insolvency
A situation where an individual or company cannot meet its financial obligations.
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Investment Grade Bonds
Bonds rated BBB or higher, indicating lower risk and a stable investment.
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Leveraged Buyout (LBO)
A corporate acquisition strategy using borrowed money to fund the purchase of a company.
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Macroeconomic Indicators
Statistics that reflect the economic performance of a country, like inflation, GDP, and employment rates.
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Market Capitalization Weighting
A method of weighting index components based on their total market value.
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Microfinance Bank (MFB)
Financial institutions in Nigeria that provide loans and savings products to low-income individuals and SMEs.
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Naira Devaluation
A reduction in the value of the Nigerian Naira relative to foreign currencies, often due to market or policy changes.
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Quantitative Easing (QE)
A monetary policy where the central bank injects money into the economy by purchasing government securities.
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Recession
A period of economic decline characterized by negative GDP growth over two consecutive quarters.
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Trade Balance
The difference between the value of a country’s exports and imports of goods and services.
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Advance-Decline Ratio
A market breadth indicator comparing the number of advancing stocks to declining stocks over a given period.
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After-Hours Trading
Trading that takes place outside the regular trading hours of the Nigerian Exchange or other stock exchanges.
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Allotment
The distribution of shares to investors in an IPO or other new issuance of securities.
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Appreciation
An increase in the value of an asset over time.
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Bid-Lot
The number of shares a buyer is willing to purchase at the bid price.
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Bilateral Agreement
A trading or financial arrangement between two parties, often used in trade finance.
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Book Building
The process by which an underwriter attempts to determine the price to offer in an IPO based on investor demand.
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Brokerage Fee
A fee charged by a broker for facilitating the buying or selling of securities.
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Capital Flight
The movement of financial assets or capital out of a country due to economic or political instability.
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Central Bank of Nigeria (CBN)
The apex regulatory authority responsible for monetary policy and financial stability in Nigeria.
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Certificate of Deposit (CD)
A time deposit issued by banks offering a fixed interest rate over a specified term.
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Clearing
The process of settling a trade by transferring funds or securities between parties.
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Convertible Preferred Shares
Preferred shares that can be converted into a specified number of common shares.
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Dividend Reinvestment Plan (DRIP)
A program allowing investors to reinvest their cash dividends into additional shares of the issuing company.
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Economic Value Added (EVA)
A measure of a company’s financial performance based on residual wealth after deducting cost of capital.
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Emerging Market
A developing economy with growth potential, like Nigeria, that offers higher risks and rewards to investors.
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Escrow Account
A temporary account where funds are held before being transferred to the ultimate recipient.
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Ex-Dividend Date
The cutoff date when a stock begins trading without the value of its next dividend payment.
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Float
The total number of shares available for public trading after subtracting restricted shares.
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Forward Contract
A customized contract to buy or sell an asset at a specified price on a future date.
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Front-Running
The unethical practice of trading securities based on advanced knowledge of pending large orders.
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Guarantor
An entity or individual that guarantees repayment of a loan or fulfillment of a financial obligation.
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Illiquid Asset
An asset that cannot be quickly converted to cash without a significant loss in value.
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Implied Volatility
The market’s forecast of a likely movement in a security’s price, derived from options pricing.
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Investment Club
A group of individuals who pool funds to make investments and share knowledge about investing.
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IPO Prospectus
A formal document issued by a company during an IPO detailing its business and risks for potential investors.
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Listed Company
A company whose shares are traded on a public exchange like the Nigerian Exchange (NGX).
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Market Sentiment
The overall attitude of investors toward a particular security or the financial market.
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Overbought
A condition where a security’s price is considered too high relative to its intrinsic value.
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Undervalued
A condition where a security’s price is considered too low relative to its intrinsic value.
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Abuja Securities and Commodity Exchange (ASCE)
A commodities exchange in Nigeria focused on trading agricultural and solid mineral commodities.
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Accumulated Dividends
Dividends on preferred shares that have not yet been paid by the company but are owed to shareholders.
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Alternative Investment Market (AIM)
A sub-market for smaller companies to raise capital, including startup enterprises.
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Arbitration Panel
A mechanism set up by the Nigerian Exchange Limited to resolve disputes between brokers, investors, or listed companies.
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Average Daily Volume (ADV)
The average number of shares traded per day over a specific period for a particular security.
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Backlog
Unfinished or pending orders, typically in trading or manufacturing operations.
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Bearer Shares
Shares that are owned by the holder of the physical share certificate, often without registration.
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Bid Price
The highest price a buyer is willing to pay for a security.
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Block Trade
A large, privately negotiated securities trade that is executed outside of open markets to minimize the impact on the stock price.
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Bridge Loan
A short-term loan used to finance an immediate need while awaiting permanent financing.
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Bull Market
A market condition where prices are rising, often driven by investor confidence.
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Buy-and-Hold Strategy
An investment strategy where investors purchase securities and hold them long-term, regardless of market fluctuations.
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Capital Adequacy Ratio (CAR)
A measure of a bank’s financial strength, calculated as its capital divided by risk-weighted assets.
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Commodity Exchange
A marketplace for buying, selling, and trading raw or primary products, such as the Lagos Commodity and Futures Exchange (LCFE).
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Convertible Bond
A bond that can be converted into a predetermined number of shares of the issuing company.
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Coupon Bond
A bond that pays periodic interest payments (coupons) to the holder until maturity.
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Cyclical Stock
Stocks of companies whose performance is closely tied to the overall economy and business cycles.
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Debenture
A type of unsecured debt instrument that relies on the issuer’s creditworthiness rather than physical collateral.
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Delisting
The removal of a company’s stock from the Nigerian Exchange Limited, often due to non-compliance or mergers.
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Equity Participation
An arrangement where investors acquire shares or ownership stakes in a business or project.
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Face Value
The nominal or original value of a bond or security as stated by the issuer.
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Fiscal Year
A 12-month accounting period used by companies to prepare financial statements, not necessarily aligned with the calendar year.
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Going Concern
An accounting term indicating that a company can continue operations into the foreseeable future.
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Holding Company
A company created to own shares in other companies, often to manage and oversee their operations.
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Interest Rate Cap
A limit placed on the interest rate that can be charged on a floating-rate loan or mortgage.
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Jumbo Loan
A type of financing that exceeds the limits set by local regulators, requiring higher down payments or interest rates.
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Lock-Up Period
A timeframe after an IPO during which insiders are restricted from selling their shares.
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National Council on Privatisation (NCP)
A government agency overseeing the privatization of public enterprises in Nigeria.
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Over-Allotment Option
An option that allows underwriters to sell additional shares beyond the initial offering amount in an IPO.
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Private Placement
A funding round of securities offered to a small group of investors, typically not publicly traded.
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African Securities Exchanges Association (ASEA)
A regional body that promotes the development of stock exchanges across Africa.
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All Share Index (ASI)
The benchmark index for the Nigerian Exchange Limited (NGX), representing the performance of all listed companies.
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Amalgamated Shares
Shares that have been combined following a corporate restructuring or merger.
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Authorized Share Capital
The maximum amount of share capital a company is authorized to issue as stated in its Memorandum of Association.
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Bearer Certificate
A physical certificate that entitles the holder to ownership of the securities listed on it.
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Bid-Ask Spread
The difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for a security.
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Bonus Issue
Free additional shares issued to existing shareholders based on the number of shares they own.
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Capital Market
A market where long-term debt or equity-backed securities are traded.
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Central Securities Clearing System (CSCS)
The Nigerian clearinghouse responsible for clearing, settlement, and custody of securities traded on the NGX.
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Commercial Paper
A short-term, unsecured promissory note issued by corporations to raise funds.
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Corporate Action
An event initiated by a publicly traded company that affects its shareholders, such as dividends or stock splits.
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Coupon
The periodic interest payment made to bondholders.
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Cross Deals
Transactions where a broker acts on behalf of both the buyer and the seller for the same security.
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Daily Official List (DOL)
A publication by the NGX providing daily trading information, including stock prices and volumes.
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Debt Instrument
A fixed-income security, such as a bond, issued by a corporation or government.
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Equity
Ownership interest in a company, represented by shares of stock.
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Exchange-Traded Commodities (ETCs)
Investment products that track the performance of commodities like crude oil or gold.
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Extraordinary General Meeting (EGM)
A meeting other than an Annual General Meeting (AGM) held to address urgent company matters.
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Fixed Income Securities
Investments that provide regular, fixed returns, such as government bonds.
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Free Float
The percentage of a company’s shares available for trading on the stock exchange.
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Growth Stock
Shares of a company expected to grow at an above-average rate compared to others in the market.
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Initial Public Offer (IPO)
When a company offers shares to the public for the first time to raise capital.
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Insider Trading
The buying or selling of a security by someone who has access to material, non-public information about the security.
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Investment Grade
A bond or other debt security with a relatively low risk of default, rated BBB- or higher.
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Investor Protection Fund
A fund established by the NGX to compensate investors in case of broker insolvency or malpractice.
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Issuing House
A financial institution that assists companies in raising capital through the issuance of securities.
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Liquidity Provider
An entity that ensures sufficient trading volume and price stability for a security.
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Margin Account
An account that allows investors to borrow funds from a broker to purchase securities.
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Market Depth
A measure of the market’s ability to sustain large buy or sell orders without impacting the price significantly.
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Market Maker
A broker or dealer that provides liquidity by being ready to buy or sell a security at publicly quoted prices.
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Merger
The combining of two or more companies into one, often to achieve economies of scale.
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Mutual Fund
An investment vehicle pooling money from multiple investors to buy diversified assets.
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Nigerian Exchange Limited (NGX)
The primary securities exchange platform in Nigeria for equities, bonds, and other financial instruments.
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Parastatal
A government-owned corporation or agency that operates commercially.
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Preferential Allotment
The allocation of shares to specific investors at a predetermined price, typically during a private placement.
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Price Floor
The minimum price set for a security below which it cannot trade on the exchange.
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Price Limit
The maximum daily price movement allowed for a security on the exchange.
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Profit-Taking
The act of selling securities to lock in profits after a rise in value.
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Recapitalization
A corporate restructuring strategy to change the capital structure of a company, often by issuing more shares or debt.
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Right Issue
An offering that gives existing shareholders the right to purchase additional shares at a discount.
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Secondary Market
A market where investors buy and sell securities they already own, such as the NGX.
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Share Buyback
A corporate action in which a company repurchases its own shares from the marketplace.
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Stockbroker
A licensed professional who buys and sells securities on behalf of clients.
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Treasury Bills
Short-term debt instruments issued by the Central Bank of Nigeria to finance government spending.
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Underwriting
The process by which investment banks or financial institutions assume the risk of issuing new securities.
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Yield Curve
A graphical representation of the interest rates on debts of different maturities.
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Z-Category Stocks
Stocks of companies that fail to comply with exchange rules, often tagged with higher risk.
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Alpha
A measure of an investment’s performance relative to a market index or benchmark.
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Annual Report
A comprehensive report detailing a company’s financial performance over the past year, provided to shareholders.
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Arbitrage
The practice of taking advantage of price differences between two or more markets for the same asset.
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Ask Price
The lowest price a seller is willing to accept for a security.
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Balance Sheet
A financial statement showing a company’s assets, liabilities, and shareholder equity at a specific point in time.
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Beta
A measure of a stock’s volatility in comparison to the overall market.
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Bond
A fixed-income investment representing a loan made by an investor to a borrower, typically a corporation or government.
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Book Value
The value of a company as shown on its balance sheet, calculated as total assets minus liabilities.
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Buyback
When a company purchases its own shares from the market to reduce the number of outstanding shares.
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Call Option
A financial contract giving the buyer the right to purchase a stock or asset at a specified price before a set date.
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Capital
Wealth in the form of money or assets used to produce more wealth or invest in a business.
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Compound Interest
Interest calculated on the initial principal and also on the accumulated interest of previous periods.
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Coupon Rate
The annual interest rate paid on a bond, expressed as a percentage of the face value.
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Debt-to-Equity Ratio
A measure of a company’s financial leverage, calculated by dividing total liabilities by shareholder equity.
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Derivatives
Financial instruments whose value is derived from an underlying asset, such as stocks, bonds, or commodities.
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Discount Rate
The interest rate used to determine the present value of future cash flows.
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Dow Jones Industrial Average
An index tracking 30 major publicly traded companies in the United States.
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Exchange-Traded Fund (ETF)
A type of investment fund that is traded on stock exchanges, similar to individual stocks.
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Expense Ratio
The annual fee expressed as a percentage of total assets that mutual funds or ETFs charge investors.
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Fundamental Analysis
The process of evaluating a stock by analyzing financial statements, industry trends, and economic conditions.
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Gross Domestic Product (GDP)
The total monetary value of all goods and services produced within a country’s borders in a given period.
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Hedge
An investment made to reduce the risk of adverse price movements in an asset.
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Initial Public Offering (IPO)
The process of a company offering its shares to the public for the first time.
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Intrinsic Value
The true value of an asset, determined through fundamental analysis.
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Leverage
The use of borrowed capital to increase the potential return of an investment.
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Liquidity
The ease with which an asset can be converted into cash without significantly affecting its value.
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Market Order
An order to buy or sell a security at the best available price.
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Mutual Fund
An investment vehicle pooling money from many investors to buy securities like stocks and bonds.
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Option
A financial contract giving the buyer the right, but not the obligation, to buy or sell an asset at a specified price.
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Over-the-Counter (OTC)
Securities traded directly between parties, rather than on an organized exchange.
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Par Value
The face value of a bond or stock, as stated in its certificate.
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Price-to-Earnings (P/E) Ratio
A valuation metric comparing a company’s current share price to its per-share earnings.
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Risk Tolerance
The degree of variability in investment returns an individual is willing to withstand.
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Return on Investment (ROI)
A measure of profitability calculated by dividing net profit by the initial investment cost.
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Securities
Tradable financial instruments, including stocks, bonds, and options.
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Short Selling
A trading strategy where an investor sells borrowed shares, hoping to buy them back at a lower price.
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Speculation
Investing in high-risk securities with the expectation of significant returns.
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Spread
The difference between the bid price and the ask price of a security.
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Stock Split
A corporate action that increases the number of shares while proportionally reducing the share price.
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Technical Analysis
The study of past market data, primarily price and volume, to predict future price movements.
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Volatility Index (VIX)
A measure of market expectations for volatility over the coming 30 days.
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Yield
The income return on an investment, expressed as a percentage of the investment’s cost or market value.
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Zero-Coupon Bond
A bond that does not pay periodic interest, sold at a discount and redeemed at face value at maturity.
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Asset Allocation
The process of dividing your investments among different asset classes like stocks, bonds, and cash to manage risk.
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Bear Market
A market condition where prices are falling, typically by 20% or more from recent highs.
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Blue Chip Stocks
Stocks of large, well-established, and financially sound companies with a history of reliable performance.
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Capital Gains
The profit earned from selling an asset, such as stocks or real estate, for more than its purchase price.
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Dividend
A portion of a company’s earnings distributed to shareholders, typically on a regular basis.
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Index Fund
A type of mutual fund or ETF designed to replicate the performance of a specific market index, such as the S&P 500.
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Market Capitalization
The total market value of a company’s outstanding shares, calculated by multiplying the stock price by the number of shares.
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Portfolio Diversification
A strategy of spreading investments across various assets to reduce risk.
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Volatility
A measure of the frequency and extent of price movements in a market or an asset.