What is Index ?

A quantity whose variation represents market fluctuation .The Standard & Poor's 500 index measures the overall change in the value of 500 stocks of the largest firms in the US.

What is holding period return/yield ?

The financial statement of a firm that presents both revenues and expenses during a specified time period.

What is GDP (gross domestic product) ?

The total value of goods and services produced by a nation. In the U.S. it is calculated by the Commerce Department, and it is the main measure of U.S. economic output .In other countries, the GDP is called the gross national product (GNP).

What is meant by going public ?

An expression used to describe the first public selling of shares of an institution that previously sold shares privately

What is fundamental analysis ?

An analysis of stocks based on fundamental factors, such as company earnings, growth potential, etc., to determine a company's worth, strength, and potential for growth

Who is financial planner ?

An investment professional who helps with financial plans for specific goals and assists in the coordination of financial concerns

What is financial strength ?

A company's financial condition as seen by its analysts .Value Line rates financial strength on a scale from A++ to C.

What is DCA (dollar cost averaging) ?

A system of buying securities at regular intervals, using a fixed amount of cash over a considerable period of time regardless of the prevailing prices of the securities .DCA protects against the risk of losing a sum of money invested all at once at an inopportune time, e.g., right before a price drop.

What is diversification ?

The process of buying securities in different investment types, industry types, risk levels, and companies in order to reduce the loss from a possible company-local or industry-local loss of business .Diversification is illustrated by a famous saying, "Don't put all your eggs in one basket."

What is cyclical industry ?

An industry whose success is closely linked to the rise and fall of the general economy . For example the auto industry is a cyclical industry.

What is Capital Loss ?

A decrease from the purchase price to the selling price of common stock or any other capital asset; a loss from the sale of investments or property

What is Capital gain ?

An increase from the purchase price to the selling price of common stock or any other capital asset; profit from the sale of investments or property .A capital gain that persists for one year or less is called a short-term capital gain. Likewise, one that persists for more than one year is called a long-term capital gain.

What is beta ?

The indicator used by Value Line to measure a stock's risk relative to the market, in this case the NYSE Index. The market's beta is always 1.0 (Based on past statistical records, a beta higher than 1.0 indicates that when the market rises, the stock will rise to a greater extent than that of the market; likewise, when the market falls, the stock will fall to a greater extent. A beta lower than 1.0 indicates that the stock will usually change to a lesser extent than that of the market. The higher the beta, the greater the investment risk.)

Government Securities

The Central Government and the State Governments issue securities periodically for the purpose of raising loans from the public. There are 2 main types of Government securities:

Dated Securities: have a maturity period of more than 1 year
Treasury Bills: have a maturity period of less than 1 year

Equity shares

Equity shares represent proportionate ownership in a company. Investors who own equity shares in a company are entitled to ownership rights, such as:

Share in the profits of the company (in the form of dividends),
Share in the residual funds after liquidation / winding up of the company,
Selection of directors in the board, etc.

Preference shares

Preferential shareholders enjoy a preferential right over equity shareholders with regards to ordinary shareholder.

Bonds

A bond is a debt investment with which the investor loans money to an entity (company or government) that borrows the funds for a defined period of time at a specified interest rate.

Debentures

A debenture is the most common form of long-term loan taken by a company. It is usually a loan repayable at a fixed date, although some debentures are irredeemable securities; these are sometimes called perpetual debentures. Most debentures also pay a fixed rate of interest, and this interest must be paid before a dividend is paid to shareholders

What are the different types of financial instruments?

The following are the different types of financial instruments-
Debentures
Bonds
Preference shares
Equity shares
Government securities

Money Market

The money market is a subsection of the fixed income market. We generally think of the term "fixed income" as a synonym of bonds. In reality, a bond is just one type of fixed income security. The difference between the money market and the bond market is that the money market specializes in very short-term debt securities (debt that matures in less than one year). Money market investments are also called cash investments because of their short maturities. Money market securities are essentially IOUs (an abbreviation of the phrase "I owe you") issued by governments, financial institutions and large corporations. These instruments are very liquid and considered extraordinarily safe. Since they are extremely conservative, money market securities offer significantly lower returns than most of the other securities.