Glossary of Stock Market

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D

Demat - Dematerialization
The move from physical certificates to electronic book keeping.

Day Order
The quantity that remains untraded is not cancelled until the end of the day.

Dalal Street
A term that refers to the Bombay Stock Exchange, the major stock exchange in India. The street is home not only the Bombay Stock Exchange but also a large number of other financial institutions.

Day Trader
A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.

De-merger
A corporate strategy to sell off subsidiaries or divisions of a company.

Debenture
A type of debt instrument that is not secured by physical asset or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. Both corporations and governments frequently issue this type of bond in order to secure capital.

Debt
An amount of money borrowed and owed by one party to another.

Debt to Equity (long term)
Total long term debt divided by total shareholder equity.

Debt to Equity (Total)
Total (short and long term) debt divided by total shareholder equity.

Default
Failure to pay back a debt.

Debt to Equity Ratio
Long-term debt divided by shareholders' equity, showing the relationship between long-term funds provided by creditors and funds provided by shareholder; a high ratio may indicate high risk, low ratio may indicate low risk.

Debt Fund
An investment pool, such as a mutual fund or ETF, in which core holdings are fixed income investments.The fee ratios on debt funds are lower, on average, than equity funds because the overall management costs are lower.

Deflation
A general decline in prices, often caused by a reduction in the supply of money or credit. It is the opposite of inflation.

Deferred Expense
Balance sheet liability reflecting expenses shown on the income statement that haven't actually been paid.

Deferred revenue
When a share is bought or sold for the purpose of receiving or effecting deliveries.

Delisting
The removal of a listed security from the exchange on which it trades.

Derivative
A security whose price is dependent upon or derived from one or more underlying assets. The derivative is a contract between two or more parties. Its value is determined by fluctuations in the underlying asset like commodities, bonds, stocks, etc

Dematerialisation
It is a process by which an investor gets physical certificates converted into electronic balances maintained in his account with the Depository Participant (DP). In other words, the shares are 'dematerialized'.

Depositories
An organization which holds securities of investors, on request in electronic from through a registered Depository Participant (DP). It can be compared with a bank. It holds securities in an account, transfers securities between accounts on the instruction of the account holder, facilitates transfers of ownership without having to handle securities and facilitates safe-keeping of shares. Minimum net worth stipulation required by SEBI for registering a DP is Rs. 100 crore.

Depository Participant (DP)
A DP is a representative of the depository in the system. The DP maintains the client's securities account balances and keeps him informed about the status of holdings. According to SEBI regulations, financial institutions (FI's), banks, custodians, stockbrokers, etc. can become DPs. It is comparable with a branch of a bank if a Depository is likened to a bank. A DP is offered depository services only after it gets proper registration from SEBI.

Depreciation
A non-cash accounting charge representing the loss in value of hard assents such as buildings and machinery over the accounting period.

Derivatives
A financial contract between two or more parties based on the future value of an underlying asset. Options and similar other instruments are examples. For instance, the value of a call option on reliance (derivative) fluctuates with the price of reliance stock. The value is totally 'derived' from the value of the underlying asset such as securities, commodities, bullion, currency, live stock, etc. it is any hybrid contract of a pre-determined fixed duration such as forward, future, option, etc. linked for the purpose of contract fulfillment to the value of a specified real or financial asset or to an index of securities

.Disinvestment
The action of an organization or government selling or liquidating an asset or subsidiary.

Diversification
A risk-management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Dividend
Distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Dip
A drop in the price of a stock that is temporary making it the ideal time to buy the stock. A precept common to all businesses: buy low sell high. Never forget, 'highs' and 'lows' are relative not absolute. Any increase over your purchase price is a gain, and vice versa. One usually gets into trouble when giving in to the thoroughly human instinct for the gap to increase (in case of gains) or decrease (in case of losses). Book your profits (or cut your losses) as you go; don't allow them to accumulate too long.

Discount
The difference between a bond's face value and when to trade a security.

Diversification
The acquisition of a group of assets in which returns on the assets are not directly related over time. Proper investment diversification is intended to reduce the risk inherent in particular securities. An investor seeking diversification for a securities portfolio would purchase securities of firms that re not similarly affected by the same variables.
For example, an investor would not want to combine large investment positions in airlines, trucking and automobile manufacturing because each industry is significantly affected by oil prices and interest rates. Of course, diversification is essentially for investors not traders. A lot of thought goes into deciding on investment avenues because you are not looking so much at the present status of the industry but at its short- or mid-term future.
This, in turn, requires that you take into an account innumerable factors that could affect the health of the industry. Of course, you can always take an analyst's help, but you should also learn to recognize factors that may impact a particular industry. This calls for clear thinking and common sense. You can do it!

Dividend
Cash payment made to the shareholders out of the profits of the company. Cash dividends are paid out of corporate earnings and the percentage of earnings paid out varies from corporation to corporation. Generally, the percentage of corporate earnings paid out runs from 40 to 80 per cent, but many times it is less, even zero, where the corporation keeps its entire earnings.
A stock dividend gives the shareholders additional shares of stock or a fraction thereof, rather than cash. It is not mandatory for accompany to distribute dividends. At the same time, if a company is stingy on its dividend policy, it is not going to find many investors.

Dividend Per Share
The amount of dividend paid out per share. (Dividend rate x nominal value of share)/100. The price used is usually the market price at the end of the period under review, for instance, the end of a financial year.

Dividend Yield
Total of 12-months' dividend paid (historical or forecast) divided by the latest share price.

Documentation
The papers that are needed to process your loan application.

Dow Jones Industrial Average (DJIA)
A stock index (one of many) commonly used as an indicator of changes in the general level of the stock market prices in United States . In this index, there are 30 industrial stocks thought to be representative of industrial stocks in general. Dow Jones & Company, a financial and investment publisher based in New York , also calculates averages for utility stocks, transportation stocks and bonds.
Just a few of the 30 companies in the DJIA are: American Express, AT&T, Bethlehem Steel, Boeing, Chevron, Disney, Coca-Cola, General Motors and IBM. You will not be directly concerned at what happens on the Dow.
But remember, the Dow average is global leader and is usually reflected by exchange around the world. The wonders of globalization! You don't have enough problems trying to understand the trend of Mumbai stock prices; you also have to keep in touch with global trends. Is that fat fee you are paying your stock analyst looking more reasonable now?

Drawing Power Valuation
Valuation in stock markets affects your drawing power and hence your loan taking ability as it is reviewed from time to time as per the applicable market value adopted by the bank. It is like an overdraft limit. But in this case it is based on the market values of shares put up as collateral against a loan. The limit fluctuates in line with the market price of the shares.

Due Diligence
The process whereby an in-depth examination of a company's business prospects is conducted. Usually when a merger, sale or acquisition of a company is intended

Downgrade
A negative change in the rating of a security.

Due Diligence - DD
An investigation or audit of a potential investment.

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