1.

Corporate action:

A corporate action is any event that brings material change

to a company and affects its stakeholders, including shareholders, both common and
preferred, as well as bondholders. These events are generally approved by the
company's board of directors; shareholders may be permitted to vote on some events
as well. Some corporate actions require shareholders to submit a response. Corporate
bondholders are also subject to the effects of corporate actions, which might include
calls or the issuance of new debt. For example, if interest rates fall sharply, a
company may call in bonds and pay off existing bondholders, then issue new debt at
the current lower interest rates. Dividends, stock splits, mergers, acquisitions and
spinoffs are all common examples of corporate actions.

2. Depository:

A depository is a facility such as a building, office or warehouse

where something is deposited for storage or safeguarding. It can refer to an
organization, bank or an institution that holds and assists in the trading of securities.
The term can also refer to a depository institution that accepts currency deposits from
customers. A depository institution provides financial services to personal and business
customers. Deposits in the institution include securities such as stocks or bonds. The
institution holds the securities in electronic form also known as book-entry form, or in
dematerialized or paper format such as a physical certificate. The three main types of
depository institutions are credit unions, savings institutions and commercial banks.
The main source of funding for these institutions is through deposits from customers.
Customer deposits and accounts are FDIC insured up to certain limits.

3. Depository participant: a Depository Participant (DP) is described as an agent

of the depository. They are the intermediaries between the depository and the
investors. The relationship between the DPs and the depository is governed by an
agreement made between the two under the Depositories Act. In a strictly legal sense,
a DP is an entity who is registered as such with SEBI under the sub section 1A of
Section 12 of the SEBI Act. As per the provisions of this Act, a DP can offer depositoryrelated services only after obtaining a certificate of registration from SEBI. As of 2012,
there were 288 DPs of NSDL and 563 DPs of CDSL registered with SEBI. SEBI (D&P)
Regulations, 1996 prescribe a minimum net worth of Rs. 50 lakh for stockbrokers, R&T
agents and non-banking finance companies (NBFC), for granting them a certificate of
registration to act as DPs. If a stockbroker seeks to act as a DP in more than one
depository, he should comply with the specified net worth criterion separately for each
such depository. No minimum net worth criterion has been prescribed for other
categories of DPs; however, depositories can fix a higher net worth criterion for their
DPs.

4. Custodian: A custodian is a financial institution that holds customers' securities for

safekeeping to minimize the risk of their theft or loss. A custodian holds securities and
other assets in electronic or physical form. Since they are responsible for the safety of
assets and securities that may be worth hundreds of millions or even billions of dollars,
custodians generally tend to be large and reputable firms. In addition to holding

securities for safekeeping, most custodians also offer other services, such as account
administration, transaction settlements, collection of dividends and interest payments,
tax support, and foreign exchange. The fees charged by custodians vary, depending on
the services that the client desires. Many firms charge quarterly custody fees that are
based on the aggregate value of the holdings. A custodian is a person or entity selected
to hold and protect customer funds or investments through either direct or indirect
means.

5.

Book Closure:

6.

Record Date:

The time period when a company will not handle adjustments to

the register, or requests to transfer shares. The book closure date is often used to
identify the cut-off date determining which investors of record will be sent a
given dividend payment. The stock of publicly-traded companies changes hands daily
as investors buy and sell shares. Due to this, when a company declares it will pay a
dividend, it must set a specific date when the company will "close"
its shareholder record book and commit to send the dividend to all investors holding
shares as of that date. A company will declare a "book closure" to signify a date.
Records are still kept during this period but the beginning date, or book closure date, is
important for determining who will be affected by some future change, for example it
helps determine who gets the dividend. A stock which pays a dividend often increases
in price by the amount of the dividend as the book closure date approaches. Due to
the logistics of processing the large number of payments, the dividend may not actually
be paid until a few days later. After the book closure date, the price of the stock usually
drops by the amount of the dividend, since buyers after this date are no longer entitled
to the dividend.

The record date is the cut-off date established by a company in

order to determine which shareholders are eligible to receive a dividend or distribution.
The determination of a record date is required to ascertain who the company's
shareholders are as of that date, since the shareholders of an actively traded stock are
continually changing. The shareholders of record as of the record date will be entitled
to receive the dividend or distribution declared by the company. Also known as the date
of record. The record date is important because of its relation to another key date, the
ex-dividend date. On and after the ex-dividend date, a buyer of the stock will not
receive the dividend as the seller is entitled to it. The ex-dividend date is set exactly
two business days before the dividend record date. This is because of the T+3 system
of settlement presently used in North America, whereby stock trades settle three
business days after the transaction is carried out. Thus, if an investor buys a stock two
business days before its record date, his or her trade would only settle the day after the
record date. He or she would therefore not be a shareholder of record for receiving the
dividend. Consider an example. Assume company Alpha has declared a dividend of
$1 payable on May 1, 2015 to shareholders of record as of April 10, 2015. The record
date is therefore April 10, 2015 and the ex-dividend date is two business days before
the record date, or April 8, 2015. If Sam wishes to receive the dividend of $1 per Alpha
share, she should buy the stock before its ex-dividend date. If she buys Alpha shares on
April 7, her trade will settle on April 10; since she is a shareholder of record as of April
10, she will receive the dividend. But if she waits for a day and buys Alpha shares on
April 8, which is the ex-dividend date, her trade will only settle on April 13 (as April 11
and April 12 are Saturday and Sunday respectively, three business days after April 8 is

April 13). She would not receive the dividend in this case as she was not a shareholder
of Alpha as of the April 10 record date.

7.

Warrant:

A warrant is a derivative that confers the right, but not the obligation, to
buy or sell a security normally equity at a certain price before expiration. The price
at which the underlying security can be bought or sold is referred to as the exercise
price or strike price. An American warrant can be exercised at any time on or before the
expiration date, while European warrants can only be exercised on the expiration date.
Warrants that confer the right to buy a security are known as call warrants; those that
confer the right to sell are known as put warrants. Warrants do not pay dividends or
come with voting rights. Investors are attracted to warrants as a means
of leveraging their positions in a security, hedging against downside (for example, by
combining a put warrant with a long position in the underlying stock) or exploiting
arbitrage opportunities. Warrants are no longer very common in the U.S., but are
heavily traded in Hong Kong, Germany and other countries.

8. Stock Split: A corporate action in which a company divides its existing shares into
multiple shares. Although the number of shares outstanding increases by a specific
multiple, the total dollar value of the shares remains the same compared to pre-split
amounts, because the split did not add any real value. The most common split ratios
are 2-for-1 or 3-for-1, which means that the stockholder will have two or three shares
for every share held earlier. Also known as a "forward stock split. In the U.K., a stock
split is referred to as a "scrip issue," "bonus issue," "capitalization issue" or "free issue."
For example, assume that XYZ Corp. has 20 million shares outstanding and the shares
are trading at $100, which would give it a $2 billion market capitalization. The
companys board of directors decides to split the stock 2-for-1. Right after the split
takes effect, the number of shares outstanding would double to 40 million, while the
share price would be $50, leaving the market capital unchanged at $ 2 billion.

9. ADR/GDR: An American depositary receipt (ADR) is a negotiable certificate issued by

a U.S. bank representing a specified number of shares (or one share) in a foreign stock
traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying
security held by a U.S. financial institution overseas, and holders of ADRs realize any
dividends and capital gains in U.S. dollars, but dividend payments in euros are
converted to U.S. dollars, net of conversion expenses and foreign taxes. ADRs are listed
on the NYSE, AMEX or NASDAQ but they are also sold OTC.
A global depositary receipt (GDR) is a bank certificate issued in more than one country
for shares in a foreign company. The shares are held by a foreign branch of an
international bank. The shares trade as domestic shares but are offered for sale globally
through the various bank branches. A GDR is a financial instrument used by private
markets to raise capital denominated in either U.S. dollars or euros.

10.
Clearing and settlement process: NSCCL carries out clearing and
settlement functions as per the settlement cycles provided in the settlement schedule.
The clearing function of the clearing corporation is designed to work out (a) what
members are due to deliver and (b) what members are due to receive on the
settlement date. Settlement is a two way process which involves transfer of funds and
securities on the settlement date. NSCCL has also devised mechanism to handle
various exceptional situations like security shortages, bad delivery, company
objections, auction settlement etc. Clearing is the process of determination of
obligations, after which the obligations are discharged by settlement.

11.
Margin requirement: A maintenance margin is the minimum amount
of equity that must be maintained in a margin account. In the context of the NYSE and
FINRA, after an investor has bought securities on margin, the minimum required level of
margin is 25% of the total market value of the securities in the margin account. Keep in
mind that this level is a minimum, and many brokerages have higher maintenance
requirements of 30-40%.Maintenance margin is also referred to as "minimum
maintenance" or "maintenance requirement."

12.
Mark to market: Mark to market (MTM) is a measure of the fair value of
accounts that can change over time, such as assets and liabilities. Mark to market aims
to provide a realistic appraisal of an institution's or companies current financial
situation. The accounting act of recording the price or value of a security, portfolio or
account to reflect its current market value rather than its book value. When the net
asset value (NAV) of a mutual fund is valued based on the most current market
valuation.

13.
Margin trading: Buying on margin is borrowing money from a broker to
purchase stock. You can think of it as a loan from your brokerage. Margin trading allows
you to buy more stock than you'd be able to normally. To trade on margin, you need
a margin account. This is different from a regular cash account, in which you trade
using the money in the account. By law, your broker is required to obtain your signature
to open a margin account. The margin account may be part of your standard account
opening agreement or may be a completely separate agreement. An initial investment
of at least $2,000 is required for a margin account, though some brokerages require
more. This deposit is known as the minimum margin. Once the account is opened and
operational, you can borrow up to 50% of the purchase price of a stock. This portion of
the purchase price that you deposit is known as the initial margin. It's essential to know
that you don't have to margin all the way up to 50%. You can borrow less; say 10% or
25%. Be aware that some brokerages require you to deposit more than 50% of the
purchase price.

14.
Direct market access: This refers to electronic facilities, often supplied
by independent firms that allow buy side firms to access liquidity for securities they

may wish to buy or sell. Buy side firms are customers of sell side firms - brokerages and
banks which may act as market makers in a security. Buy side firms will still use the
trading infrastructure of sell side firms, but have more control over how the trade is
executed. Direct market access allows buy side firms to often execute trades with lower
costs. Since it is all electronic, there is less chance of trading errors. Order execution is
extremely fast, so traders are better able to take advantage of very short-lived trading
opportunities.

15.

ASBA: Applications Supported by Blocked Amount is a process developed

by the India's Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO
applicant's account doesn't get debited until shares are allotted to them. ASBA is an
application containing an authorization to block the application money in the bank
account, for subscribing to an issue. If an investor is applying through ASBA, his
application money shall be debited from the bank account only if his/her application is
selected for allotment after the basis of allotment is finalized, or the issue is
withdrawn/failed. It is a supplementary process of applying in Initial Public Offers (IPO)
and Follow-On Public Offers (FPO) made through Book Building route and co-exists with
the current process of using cheque as a mode of payment and submitting applications.

16.
NEAT system: NSE operates on the 'National Exchange for Automated
Trading' (NEAT) system, a fully automated screen based trading system, which adopts
the principle of an order driven market. NSE consciously opted in favour of an order
driven system as opposed to a quote driven system. This has helped reduce jobbing
spreads not only on NSE but in other exchanges as well, thus reducing transaction
costs.

17.
Basket trading: A basket trade is an order to buy or sell a group
of securities simultaneously.
Basket
trading
is
essential
for institutional
investors and investment funds who wish to hold a large number of securities in certain
proportions. As cash moves in and out of the fund, large baskets of securities must be
bought or sold simultaneously, so that price movements for each security do not alter
the portfolio allocation. In order for a trade to be considered a "basket trade," it must
typically involve the sale or purchase of 15 or more securities. For example, an index
fund aims to track its target index by holding most or all the securities of the index. As
new cash comes in that could increase the value of the fund, management must
simultaneously buy a large number of securities in the proportion they are present in
the index. If it were not possible to execute a basket trade on all of these securities,
then the quick price movements of the securities would prevent the index fund from
holding the securities in the correct proportions.

18.

Stock split and buy back of shares: A buyback is the repurchase

of outstanding shares (repurchase) by a company in order to reduce the number of

shares on the market. Companies will buy back shares either to increase the value of
shares still available (reducing supply), or to eliminate any threats by shareholders who
may be looking for a controlling stake. A buyback allows companies to invest in them.
By reducing the number of shares outstanding on the market, buybacks increase the
proportion of shares a company owns.

19.

Lot size:

In general, any group of goods or services making up a transaction.

In the financial markets, a lot represents the standardized quantity of a financial
instrument as set out by an exchange or similar regulatory body. For exchange-traded
securities, a lot may represent the minimum quantity of that security that may be
traded. In terms of stocks, the lot is the number of shares you purchase in one
transaction. In terms of options, a lot represents the number of contracts contained in
one derivative security.

20.
Block trading system: A block trade, also known as a block order, is an
order or trade submitted for the sale or purchase of a large quantity of securities. A
block trade involves a significantly large number of equities or bonds being traded at
an arranged price between two parties, sometimes outside of the open markets, to
lessen the impact on the security price. In general, 10,000 shares of stock, not
including penny stocks, or $200,000 worth of bonds are considered a block trade. Due
to the size of block trades, both on the debt and equities markets, individual investors
rarely, if ever, make block trades. In practice, these trades typically occur when
large hedge funds and institutional investors buy and sell large sums of bonds and
shares in block trades via investment banks and other intermediaries. If a block trade is
conducted on the open market, traders must be careful with the trade, seeing as it
causes large fluctuations in volume and can impact the market value of the shares or
bonds being purchased. Therefore, block trades are usually conducted through an
intermediary, rather than the hedge fund or investment bank purchasing the securities
normally,
as
they
would
for
smaller
amounts.
21.
New Fund Offer NFO: A security offering in which investors may
purchase units of a closed-end mutual fund. A new fund offer occurs when
a mutual fund is launched, allowing the firm to raise capital for purchasing
securities. A new fund offer is similar to an initial public offering. Both represent
attempts to raise capital to further operations. New fund offers are often
accompanied by aggressive marketing campaigns, created to entice investors to
purchase units in the fund. However, unlike an initial public offering (IPO), the price
paid for shares or units is often close to a fair value. This is because the net asset
value of the mutual fund typically prevails. Because the future is less certain for
companies engaging in an IPO, investors have a better chance to purchase
undervalued shares.
22.
Scheme Information Document: The Scheme Information Document
sets forth concisely the information about the scheme that a prospective investor ought
to know before investing. Before investing, investors should also ascertain about any
further changes to the Scheme Information Document after the date of the Document
from the Mutual Fund / Investor Service Centres / Website / Distributors or Brokers.

23.

Statement of Additional Information SAI:

24.

Key Information Memorandum (KIM):

25.

Systematic investment plan (SIP):

26.

Systematic Withdrawal Plan SWP:

27.

Systematic Transfer Plan:

A supplementary
document to a mutual fund's prospectus that contains additional information about the
fund and includes further disclosure regarding its operations. Also, known as "Part B" of
the fund's registration statement. Information contained in the SAI conveys information
about a mutual fund that is not necessarily needed by an investor to make an informed
investment decision since the prospectus usually provides all of the information
needed, in abbreviated form. However, some investors find the SAI useful and although
fund companies are not required to provide it, they must give it to investors upon
request and without charge.
The Key Information
Memorandum (KIM) sets forth the information, which a prospective Investor ought to
know before investing. For further details of the scheme/Mutual Fund, due Diligence
certificate by the AMC, Key Personnel, investors rights & services, risk factors,
Penalties & pending litigations etc. investors should, before investment, refer to the
Scheme Information Document and Statement of Additional Information available free
of cost at. Any of the Investor Service Centres or distributors or from the website www.
-----.
A systematic investment plan
(SIP) is a plan where investors make regular, equal payments into a mutual fund,
trading account or retirement account, such as a 401(k), and benefit from the long-term
advantages of dollar-cost averaging (DCA) and the convenience of saving regularly
without taking any actions except the initial setup of the SIP. Because dollar-cost
averaging involves buying a fixed-dollar amount of a security regardless of its price,
shares are bought at various prices, the average cost per share of the security
decreases over time and the risk of investing a large amount of money into a security
lessens. A money market account or other liquid account is typically used for funding
payments or buying shares going into a systematic investment plan. In addition to SIPs,
many investors reinvest dividends received from their holdings back into purchasing
more stock, called dividend reinvestment plans (DRIPs).

A service offered by a mutual

fund that provides a specific payout amount to the shareholder at predetermined
intervals, generally monthly, quarterly, semi annually or annually. Three main reasons
for using SWPs are to meet living requirements (usually when retired), for tax planning
purposes, or to comply with mandatory retirement plan withdrawal rules after reaching
age 70.5.

Systematic Transfer Plan whereby an

investor is able to invest lump sum amount in a scheme and regularly transfer a fixed
or variable amount into another scheme. In case of a volatile market, STP helps the
investors to periodically transfer funds from one scheme (source scheme) to another
(target scheme) and help them save the effort and time by compressing multiple
instructions required for redemption from one scheme to invest in the other into a
single instruction

28.

Holding Period Return:

29.

Annualized return:

31.

Continuous compounding return and log normal return:

The total return received from holding an asset

or portfolio of assets over a period of time, generally expressed as a percentage.
Holding period return/yield is calculated on the basis of total returns from the asset or
portfolio i.e. income plus changes in value. It is particularly useful for comparing
returns between investments held for different periods of time. Holding Period Return
(HPR) returns over multiple years can be calculated as follows: Holding Period Return =
Income + (End of Period Value Initial Value) / Initial Value.

Annualized return is the return an investment

provides over a period of time, expressed as a time-weighted annual percentage.
Sources of returns can include dividends, returns of capital and capital appreciation.
The rate of annualized return is measured against the initial amount of the investment
and represents a geometric mean rather than a simple arithmetic mean. An annualized
return can be calculated for various assets, which include stocks, bonds, funds,
commodities and some types of derivatives. This process is a preferred method,
considered to be more accurate than a simple return, as it includes adjustments for
compounding interest. Different asset classes are considered to have different strata of
annual returns.
30.
Compounded return: The compounded return is the rate of return,
usually expressed as a percentage that represents the cumulative effect that a series of
gains or losses have on an original amount of capital over a period of time.
Compounded returns are usually expressed in annual terms, meaning that the
percentage number that is reported represents the annualized rate at which capital has
compounded over time. When expressed in annual terms, a compound return can be
referred to as a compound annual growth rate (CAGR)".

Continuous compounding is the mathematical limit that compound interest can reach.
It is an extreme case of compounding since most interest is compounded on a monthly,
quarterly or semi annual basis. Hypothetically, with continuous compounding, interest
is calculated and added to the account's balance every infinitesimally small instant.
While this is not possible in practice, the concept of continuously compounded interest
is important in finance.

Log normal returns

32.

Arithmetic mean:

33.

Geometric mean: The geometric mean is the average of a set of products,

The arithmetic mean is a mathematical representation

of the typical value of a series of numbers, computed as the sum of all the numbers in
the series divided by the count of all numbers in the series. The arithmetic mean is
sometimes referred to as the average or simply as the mean. Some mathematicians
and scientists prefer to use the term "arithmetic mean" to distinguish it from other
measures of averaging, such as the geometric mean and the harmonic mean.

the calculation of which is commonly used to determine the performance results of an

investment or portfolio. It is technically defined as "the 'n'th root product of 'n'
numbers." The geometric mean must be used when working with percentages, which
are derived from values, while the standard arithmetic mean works with the values
themselves.

34.

Expected return:

35.

Risk:

36.

Standard deviation:

37.

Variance:

Expected return is the amount of profit or loss an

investor anticipates on an investment that has various known or expected rates of
return. It is calculated by multiplying potential outcomes by the chances of them
occurring, and summing these results. For example, if an investment has a 50% chance
of gaining 20% and a 50% change of losing 10%, the expected return is (50% x 20% +
50% x -10%), or 5%.
Risk involves the chance an investment's actual return will differ from
the expected return. Risk includes the possibility of losing some or all of the original
investment. Different versions of risk are usually measured by calculating the standard
deviation of the historical returns or average returns of a specific investment. A high
standard deviation indicates a high degree of risk. Many companies allocate large
amounts of money and time in developing risk management strategies to help manage
risks associated with their business and investment dealings. A key component of the
risk management process is risk assessment, which involves the determination of the
risks surrounding a business or investment.
Standard deviation is a measure of the dispersion of
a set of data from its mean. If the data points are further from the mean, there is higher
deviation within the data set. Standard deviation is calculated as the square root of
variance by determining the variation between each data point relative to the mean. In
finance, standard deviation is applied to the annual rate of return of an investment to
measure the investment's volatility. Standard deviation is a statistical measurement
that sheds light on historical volatility. For example, a volatile stock has a high standard
deviation, while the deviation of a stable blue-chip stock is lower. A large dispersion
indicates how much the return on the fund is deviating from the expected normal
returns.
Variance is a measurement of the spread between numbers in a
data set. The variance measures how far each number in the set is from the mean.
Variance is calculated by taking the differences between each number in the set and
the mean, squaring the differences (to make them positive) and dividing the sum of the
squares by the number of values in the set.

X: individual data point

u: mean of data points
N: total # of data points
Note: When calculating a sample variance to estimate a population variance, the
denominator of the variance equation becomes N - 1 so that the estimation is unbiased
and does not underestimate population variance.

38.

Exchange-Traded Fund (ETF):

An ETF, or exchange traded fund, is a

marketable security that tracks an index, a commodity, bonds, or a basket of assets like
an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock
exchange. ETFs experience price changes throughout the day as they are bought and
sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares,
making them an attractive alternative for individual investors. Because it trades like a
stock, an ETF does not have its net asset value (NAV) calculated once at the end of
every day like a mutual fund does.

39.

Unit linked insurance plan (ULIP):

A unit linked insurance plan

(ULIP) is a type of insurance vehicle in which the policyholder purchases units at their
net asset values and also makes contributions toward another investment vehicle. Unit
linked insurance plans allow for the coverage of an insurance policy, and provide the
option to invest in any number of qualified investments, such as stock, bonds or mutual
funds. A unit linked insurance plan acts just like a savings vehicle, but also has the
benefits of an insurance contract. When an investor purchases units in a ULIP, he or she
is purchasing units along with a larger number of investors, just like an investor would
purchase units in a mutual fund. Different ULIPs offer different qualified investments. Be
sure to read the plan's prospectus before purchasing any ULIP.
40.
Net asset value (NAV): Net asset value is value per share of a mutual
fund or an exchange-traded fund (ETF) on a specific date or time. With both security
types, the per-share dollar amount of the fund is based on the total value of all the
securities in its portfolio, any liabilities the fund has and the number of fund shares
outstanding. In the context of mutual funds, NAV per share is computed once per day
based on the closing market prices of the securities in the fund's portfolio. All of the buy
and sell orders for mutual funds are processed at the NAV of the trade date. However,
investors must wait until the following day to get the trade price. Mutual funds pay out
virtually all of their income and capital gains. As a result, changes in NAV are not the
best gauge of mutual fund performance, which is best measured by annual total return.