Annual General Meeting (AGM): An annual general meeting, called by the directors of a company, which shareholders are invited to attend. Subjects normally discussed include audited accounts, election or re-election of directors and dividend payments to shareholders.
The AGM is the main opportunity for shareholders to put questions direct to the directors of the company. They can also put forward their own motions, though some companies have criteria for motions which may restrict this - e.g. they may require that only shareholders with a certain number of shares can put forward motions.

Annual Report: A report that public companies are required to file annually which describes the preceding year’s financial results and plans for the upcoming year. Annual reports include information about a company’s assets, liabilities, earnings, profits, and other year-end statistics.

Annuity: A contract by which an insurance company agrees to make regular payments to someone for life or for a fixed period in exchange for a lump sum or periodic deposits.
Asset Allocation: The placement of a certain percentage of investment capital within different types of assets (e.g., 50% in stock, 30% in bonds, and 20% in cash).

Asset Stripping: The practice of acquiring a company, then selling parts of it, in the hope that the cash realised from these sales will match the entire acquisition cost, meaning that the asset stripper is left with the remaining parts at nil cost. The Federal Government of Nigeria frowns at this kind of activity especially in respect of privatised public companies.
Automatic Investment Plan: An arrangement where investors agree to have money automatically withdrawn from a bank account on a regular basis to purchase stock or mutual fund shares.

Balance Sheet: One of the main components of a company's Report and Accounts, the balance sheet provides a snapshot of everything the company owes and owns at the end of the financial year in question. While the profit and loss account tells you how the company has performed in the previous year, the balance sheet reveals things about its fundamental health, like whether it can pay its debts and how good its cash management is. A 'strong' balance sheet is one where liabilities (including borrowings) are considerably outweighed by assets (including cash).

Bear Market: Term used to describe a prolonged period of declining stock prices.

Blue-Chip Stock: Term, derived from the most expensive chips in a poker game, used to indicate the stock of companies with long records of growth and profitability.
Board of Directors: The directors are a company's most senior internal managers and some external individuals representing major shareholders. They are elected to run the company by shareholders. Directors of public companies generally have to be re-elected by shareholders every couple of years, which is usually just a formality, but there are occasional upsets as some directors have been known to be voted out of the board when shareholders are not satisfied with the performance of the company.

Bond: A debt instrument or IOU issued by corporations or units of government.

Bond Fund: Mutual fund that holds mainly municipal, corporate, and/or government bonds.

Broker: A professional who transfers investors’ orders to buy and sell securities to the market and generally provides some financial advice.

Bull Market: Term used to describe a prolonged period of rising stock prices.

Buy and Hold: A strategy of purchasing an investment and keeping it for a number of years.

Capital Appreciation: An increase in market value of an investment (e.g., stock).
Capitalization (Market Capitalisation): The market value of a company, calculated by multiplying the number of shares outstanding by the price per share. Capitalization is often called "cap" for short in the names of specific investments (e.g., ABC Small Cap Growth Fund).
Certificate of Deposit (CD): An insured bank product that pays a fixed rate of interest (e.g., 10%) for a specified period of time.

Churning: When a broker excessively trades securities within an account for the purpose of increasing his or her commissions, rather than to further a client’s investment goals.
Closed-End Fund: An investment company that issues a limited number of shares that can be bought and sold on market exchanges.

Commission: Fee paid to a broker to trade securities, generally based on the number of shares traded (e.g., 100 shares) or the Naira amount of the trade. Brokers’ Commission is regulated by the Nigerian Stock Exchange.

Common Stock: Securities that represent a unit of ownership in a corporation.

Compound Interest: Interest credited daily, monthly, quarterly, semi-annually, or annually on both principal and previously credited interest.

Conglomerates: A company which owns a number of other companies with widely diversified activities. Conglomerates go in and out of fashion. Sometimes the stock market loves them; other times it hates them and demands that they be broken up to 'release shareholder value'. There is never any shortage of consultants showing how this can be achieved.

Convertible Securities: Bonds or preferred stock that can be exchanged for a fixed number of shares of common stock in the same corporation.

Corporate Bonds: Debt instruments issued by for-profit corporations.

Daily Official List: The daily record setting out the prices of all trades in shares and other securities conducted on the Nigerian Stock Exchange.

Debenture: A type of long term bond (loan), taken out by a company, which it agrees to repay at a specified future date. The company will usually pay a fixed rate of interest to debenture holders each year until maturity, and if it fails to pay either the interest or the principal amount of the loan when the time comes, the debenture holders can force the company into liquidation and recover their money from a sale of the its assets.

Discount Broker: A broker that trades securities for a lower commission than a full-service broker.

Diversification: The policy of spreading assets among different investments to reduce the risk of a decline in the overall portfolio from a decline in any one investment.

Dividend: A distribution of income from investments to shareholders.
Dividend Reinvestment Plans (DRIPs): Plans that allow investors to automatically reinvest any dividends a stock pays into additional shares.
Dow Jones Industrial Average: The most widely used gauge of stock market performance. Also know as "The Dow," it tracks 30 stocks in large well-established U.S. companies.

Equity Investing: Becoming an owner or partial owner of a company or a piece of property through the purchase of investments such as stock, growth mutual funds, and real estate.

Ex-Dividend: Purchase of shares without entitlement to current dividends. This entitlement remains with the seller.

Ex-Rights: Purchase of shares without entitlement to current rights issues. This entitlement remains with the seller.

Ex-Scrip: Purchase of shares without entitlement to current scrip issues. This entitlement remains with the seller.

Exceptional Items: Costs which affect a company's profit (or loss) which are associated with normal activities but are exceptional in magnitude.

Full-Service Broker: A broker that charges commissions based on the type and amount of securities traded. Full-service brokers typically charge more than discount brokers but also provide more extensive services (e.g., research and personalized advice).

Growth Fund: Mutual fund that invests in stocks exhibiting potential for capital appreciation.

Growth Stocks: Stock of companies that are expected to increase in value.

Income Stocks: Stock of companies that expect to pay regular and relatively high (compared to growth stocks) dividends.

Index: An unmanaged collection of securities whose overall performance is used as an indication of stock market trends. An example of an index is the widely quoted NSE All-Shares Index, which aggregates all company stocks quoted on the Nigerian Stock Exchange.

Index Fund: Mutual fund that attempts to match the performance of a specified stock or bond market index by purchasing some or all of the securities that comprise the index.

Investment Clubs: Organizations of investors who meet and contribute money regularly toward the purchase of securities.

Investment Objective: The goal (e.g., current income) of an investor or a mutual fund. Mutual fund objectives must be clearly stated in their prospectus.

Limit Order: An order to buy or sell securities that specifies that a trade should be made only at a certain price or better.

Liquidity: The quality of an asset that permits it to be converted quickly into cash without a significant loss of value.

Management Fee: The amount paid by mutual funds to their investment advisers.

Market Order: An order to buy or sell a stated amount (e.g., 100 shares) of a security at the best possible price at the time the order is received in the marketplace.

Market Value: The current price of an asset, as indicated by the most recent price at which it traded on the open market. If the most recent trade in ABC stock was at $25 for example, the market value of the stock is $25.

Maturity: The date on which the principal amount of a bond, investment contract, or loan must be repaid.

Microcap Stock: Low priced stocks issued by the smallest of companies. Companies with low or "micro" capitalization typically have limited assets and a small total market value.

Money Market Mutual Fund: A highly liquid mutual fund that invests in short-term obligations such as commercial paper, government securities and certificates of deposit.

Mutual Fund: An investment company that pools money from shareholders and invests in a variety of securities, including stocks, bonds and money market securities.

Net Asset Value: The market value of a mutual fund’s total assets, after deducting liabilities, divided by the number of shares outstanding.

Net Worth: The Naira value remaining when liabilities (what you owe) are subtracted from assets (what you own). Example: N200, 000 of assets - N125, 000 of debt = a N75, 000 net worth.

Online Investing: The purchase of securities from brokerage firms via the Internet using a computer and modem.

Open-End Fund: An investment company that continually buys and sells shares to meet investor demand. It can have an unlimited number of investors or money in the fund.

Portfolio: The combined holding of stocks, bonds, cash equivalents, or other assets by an individual or household, investment club, or institutional investor (e.g., mutual fund).

Preferred Stock: A type of stock that offers no ownership or voting rights and generally pays a fixed dividend to investors.

Price/Earnings (P/E) Ratio: The price of a stock divided by its earnings per share (e.g., N40 stock price divided by N2 of earnings per share = a P/E ratio of 20).

Principal: The original amount of money invested or borrowed, excluding any interest or dividends.

Real Estate: Land, permanent structures on land, and accompanying rights and privileges, such as crop or mineral rights.

Risk: Exposure to loss of investment capital (i.e., amount of money invested).

Risk Management: Actions taken (e.g., purchase of insurance) to provide protection against catastrophic financial losses (e.g., disability and liability). Risk management is an important investing prerequisite.

Securities: A term used to refer to stocks and bonds in general.

Securities and Exchange Commission (SEC): Federal Government agency created to administer all Securities- related activities. Statutes administered by the SEC are designed to promote full public disclosure about investments and protect the investing public against fraudulent and manipulative practices in the securities markets.

Stock: Security that represents a unit of ownership in a corporation.

Total Return: The return on an investment including all current income (interest and dividends), plus any change (gain or loss) in the value of the asset.

Value Stock: A stock with a relatively low price compared to its historical earnings and the value of the issuing company’s assets.

Volatility: The degree of price fluctuation associated with a given investment, interest rate, or market index. The more price fluctuation that is experienced, the greater the volatility.