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Active Management
An investment strategy which aims to outperform a particular market or sector. Active managers have full flexibility in deciding what securities to buy and sell based on investment research, market forecasts, and their own judgment.
Annual Return
The average annual profit or loss realized by an investment at the end of a specified calendar period.
Ask Price
The lowest price at which a dealer is willing to sell at a specified quantity of a particular security.
Asset Allocation
The process of determining the optimal investment portfolio among a mix of assets such as stocks, bonds, cash & real estate.
At Auction Limit Order
It is a Limit Order with a specified price for single
price auction during pre-open session. Unfilled at-auction
limit orders, with input price not deviating 9 times
or more from the prevailing nominal price, will be converted
to Limit Orders at the input limit price and carried
forward to the continuous trading session. The stock
market acceptable order input period for At-Auction
Limit Orders is 9:30 a.m. - 9:45a.m.
Authorized Funds
A unit trust or mutual fund that meets the requirements
of the Hong Kong Securities & Futures Commission ("SFC")
and is allowed to be sold in Hong Kong. Authorization
does not imply recommendations by the SFC.
Bear
Investor's pessimistic forecast on the market price.
Bid Price
The highest price at which a dealer is willing to purchase at a specified quantity of a particular security.
Bid-ask Spread
The difference between bid and ask price.
Book Value
The amount of stockholders' equity which equal to the amount of the firm's assets minus the firm's liabilities and preferred stocks.
Brokerage Fee
The commission charged by a broker who facilitates the buying and selling of securities for investors.
Bull
Investor's optimistic forecast on the market price.
Capital Gain/Loss
The difference between the current market value of an asset and the original cost of the asset due to capital appreciation or depreciation.
Capital Market
Financial market in which financial assets with a maturity term of typically more than one year are traded.
Compound Interest
Interest paid to the initial deposit plus the accumulated interest.
Cumulative Dividends
A common feature of preferred stock requires that the issuing corporation pay all previously unpaid preferred stock dividends before any common stock dividends may be paid.
Custodian
The bank or trust company that keeps custody of stock certificates and other assets of a mutual fund. Provides safekeeping of securities but has no role in portfolio management.
Day Order
A trading order for which the broker will attempt to
fill the order only on the day of order placing.
Declaration Date
The date on which a corporation's directors announce the date and amount of the next dividend.
Defined Contribution Plan
A retirement plan offering a benefit that depends on the total contributions made by the employer and the employee, and on the investment returns earned by those contributions. Under this situation, employees generally bear the investment risk.
Diversification
Spreading of risk by putting assets in several categories
of investments, e.g. stocks, bonds, money market instruments,
or a mutual fund.
Dividends
Cash payments made to stockholders by the corporation.
Dividend Yield
The current annualized paid on a share of common stock, expressed as a percentage of the current market price.
Discount Rate
- The interest rate used in calculating the present value of future cash flows. The discount rate reflects not only the time value of money but also the riskiness of the cash flow.
- The interest rate charged by the Federal Reserve
on loans to banks and other financial institutions.
Dollar Cost Averaging
A method of accumulating assets by investing a fixed amount of dollars in securities and mutual funds at set intervals. The investor buys more shares or mutual fund units when the price is low and fewer shares and mutual fund units when the price is high.
Earnings per Share (EPS)
A corporation's accounting earnings divided by the number
of its common shares outstanding.
Earnings-price Ratio
The ratio of earnings to price, which is the reciprocal of the price-earnings ratio.
Ex-Dividend Date
The date on which ownership of stock is determined for purposes of paying cash dividends. Owners purchasing shares before the ex-dividend date receive the dividend in question. Owners purchasing shares on or after the ex-dividend date are not entitled to the dividend.
Execution
The process of completing an order to buy or sell securities.
Fund Manager
A mutual fund is run by one manager, or a team of managers who decide upon the mutual fund's portfolio and investment strategy. The portfolio is chosen according to the investment objective of the fund, as stated in the prospectus, and according to the managers' unique investment strategy.
Fundamental Analysis
A form of security analysis that seeks to determine the intrinsic value of securities based on the basis of underlying economic factors. These intrinsic values are compared with current market prices to estimate current levels of mispricing.
H-share
The Chinese enterprise share listed on the Stock Exchange of Hong Kong.
High-yield Bond
A bond that has a rating of BB or lower and that pays a higher yield to compensate for its greater risk.
Index Fund
A mutual fund that seeks to mirror general stock-market performance by matching its portfolio to a broad-based index.
IPO (Initial Public Offering)
The first offering of the shares of a company to the public.
Junk Bond
A bond with a credit rating of BB or lower by rating agencies. Issuers and holders prefer the securities be called high-yield bonds. Junk bonds are issued by companies without long track records of sales and earnings, or by those with questionable credit strength. Since they are more volatile and pay higher yields than investment grade bonds, many risk-oriented investors specialize in trading them.
Limit Order
A trading order that specifies a limit price at which
the broker is to execute the order. The trade will be
executed only if the broker can meet or is better than
the limit price.
Limit Price
The price specified when a Limit Order is placed with
a broker, defining the maximum purchase price or minimum
selling price at which the order can be executed.
Management Fee
The amount a mutual fund pays to its investment adviser for services rendered, including management of the fund's portfolio. In general, this fee ranges from 0.5% to 1.75% of the fund's net asset value.
Market Capitalization
The aggregate market value of a security, equal to the market price per unit of the security multiplied by the total number of outstanding units of the security.
Market Order
A trading order that instructs the broker to buy or sell a security immediately at the best obtainable price.
Net Asset Value
The market value of an investment company's assets, less any liabilities, divided by the number of shares outstanding.
Net Asset Value per Share/ Unit
Net asset value ("NAV") per share/unit is the dollar
value of each share/unit of the funds. It is calculated
by totaling the market value of all securities owned
by the fund and subtracting all its liabilities. The
net balance will then be divided by the total outstanding
shares/ units. The result is the NAV per share/unit.
Net Present Value
The present value of future cash flows expected to be received from a particular investment less the cost of that investment.
Nominal Return
The percentage change in the value of a financial asset, where the beginning and ending values of the asset are not adjusted for inflation over the time of the investment.
Offering Document
A legal document that gives prospective investors information
about a mutual fund, including its investment objectives
and policies, risks, costs, and past performance. Investor
should read the Prospectus before investing.
Offshore Fund
A mutual fund which is domiciled outside Hong Kong. Most mutual funds available in Hong Kong are domiciled in overseas jurisdictions such as Luxembourg, Bermuda or Dublin.
Open-end Fund
Mutual fund with unlimited number of shares available for investors to purchase.
Participation Rate
Participation Rate refers to the relationship between
the potential return of the fund and the performance
of the fund's underlying portfolio. The higher participation
rate, the higher capability to capture the potential
return.
Present value
The future value which is discounted by the inflation
rate.
Price-Earnings Ratio
A corporation's current stock price divided by its earnings per share.
Prospectus
An official document that each investment company must publish, describing the mutual fund and offering its shares for sale. It contains information required by the Securities and Futures Commission.
Real Return
The percentage change in the value of an investment
in a financial asset, where the beginning and ending
values of the asset are adjusted for inflation over
the time of investment.
Redemption Fee
A fee charged by a number of funds for redeeming fund shares.
Settlement Date
The date after a security has been traded on which the buyer must deliver cash to the seller and the seller must deliver the security to the buyer.
Spread
Difference between the rates of buy/sell foreign exchange;
or it refers to the difference between the borrowing
and lending rates in deposit.
Technical Analysis
A form of security analysis to forecast the movement
in the price of securities based on the historical price
and volume trends for those securities.
Turnover
The amount of total shares bought or sold.
Year-to-date Return
The percentage the measure the security/fund value change
between the last trading day of the previous year and
today.
Yield
The rate of return on investment over a period of time.
It's usually expressed in an annual rate.
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