basics terms of shares and bonds

APPLICATION MONEY

Application money is the amount that investors are asked to pay with the application for a new share issue . the amount is usually les than the full value of the shares, the remaining amount is collected at the time of allotment or per call bases.

The amount an investor must pay at the time of making an application under a public offering of shares.

CALL MONEY

money lent by banks, as to brokerage firms,  to finance margin loans on which repayment may be demanded at any time. Generally, call money can be obtained by giving a two-day notice. The interest rate charged is flexible.

Money which is loaned, in the call market, which can be demanded for repayment on call, i.e., immediately. Also known as money at short notice, also traded in the money market, is repayable in 24 hours.

Price paid for buying a call option.

a loan that must be repaid on demand

a loan to a broker that is secured by shares of stock purchased with the borrowed money and which may be called if the shares decline in value

CERTIFICATE OF DEPOSITS

A certificate of deposit or CD is a time deposit, a financial product commonly offered to consumers by banks, thrift institutions, and credit unions. it is a certificate from a bank stating that a company has so much money in the bank on term deposit. It is a negotiable instrument and can be sold at a discount at a short notice to raise cash.

Many brokerage firms – known as “deposit brokers” – offer CDs. These brokerage firms can sometimes negotiate a higher rate of interest for a CD by promising to bring a certain amount of deposits to the institution.

CERTIFIED CHEQUES

The one Cheque that assures a guarantee of not getting  bounce, as it is issued by a bank with a guarantee of payment. The bank is legally obligated to honour it. The funds to cover it are immediately withdrawn from the depositor’s account.

Banks enable the financial market to conduct financial transactions using cheques. An account holder in a bank can give a cheque for a particular amount of money present in the bank’s account. The restriction is that the value of cheque must be lesser than the amount present in the account. If the cheque is worth more than the balance in the account then it is termed as “bounced”. Certified cheques whereas can be issued by the customer only when the bank verifies that the specified amount is present in the account.

The bank then transfers the money internally so that the cheque may be redeemed by the bearer or account holder when encashed. These may be considered liquid in financial terms since they will most certainly be converted to cash instantly. Some countries put restriction on these cheques since they might be used as substitute for real money.

CLEARING

clearing is a method of settlement of accounts of brokers in a stock exchange. Dates are fixed by the stock exchange for the first and last working  days of each clearing. The period between these days,  normally is of  two weeks, is the settlement period.

CLONE FUNDS

A mutual fund that replicates the performance or strategy of an existing mutual fund or index through the use of derivatives is known as clone fund . A new fund, set up by a company or corporation, which has affinity with existing funds.for example  funds of new schemes floated by the Life Insurance Corporation, would be regarded as clone funds.

CHINESE WALL

Watertight compartments in a business house which keeps the information of each department confidential, so that the people inside the company do not take advantage of iternal information, for example for INSIDER TRADING. Chinese wall also separates the various stockbroking functions, e.g., jobbing, portfolio management, etc. in a stockbroker’s firm, so that one department is not able to influence the decisio of other department , such as the section dealing with shares offering its holdings for investment by portfolio.

Ttherefore , it is the ethical barrier between different divisions of a financial (or other) institution to avoid conflict of interest

COMMODITY MARKET

in commodity market  funds make investing in gold, oil or grain an easier prospect. Market for trading bulk and basic goods like grain, edible oil,cotton, gold ,silver  etc. Certain special items like tea and coffee are traded in auctions after inspecting the good wisely.