tricky definitions Flashcards
Capital Reserve
Revaluation Reserve + Share Premium Account/Reserve.
Share Premium Account/Reserve
arises when shares are issued above nominal value
Where is the nominal of a share decided
The nominal price of a share is the minimum price at which shares can be issued according to the company’s articles of association or bylaws. It’s typically a relatively low value, often set when the company is first established.
Parity
State of being equal
What is the difference between a market-maker, dealer and broker-dealer?
Broker-Dealer - Brokers deals, not taking position but can also take a position
Market-Maker - continuous bid and ask- profits off of spread, can be designated by regulator or exchange as designated market maker
Dealer - simply buys and sells securities
Market-Maker:
A market-maker is a financial institution or individual that stands ready to buy and sell securities or other financial instruments at publicly quoted prices.
Market-makers help ensure liquidity in the market by providing continuous bid and ask prices for securities.
Market-makers facilitate trading by buying securities from sellers (bids) and selling securities to buyers (asks) at quoted prices.
They profit from the spread between the bid and ask prices, known as the bid-ask spread.
Market-makers often operate in specific markets or securities and may be designated as official market-makers by exchanges or regulatory authorities.
Dealer:
A dealer is a financial intermediary that buys and sells securities or other financial instruments for its own account.
Dealers typically maintain an inventory of securities and actively engage in trading with customers or other market participants.
Unlike market-makers, dealers may not be required to provide continuous bid and ask prices, but they facilitate trading by quoting prices for specific transactions.
Dealers may also provide additional services, such as market analysis, research, and advisory services, to their clients.
Some dealers may also act as market-makers in specific markets or securities, but not all dealers necessarily serve this function.
Broker-Dealer:
A broker-dealer is a financial firm or individual that engages in both brokerage and dealing activities in the financial markets.
As a broker, the firm facilitates transactions between buyers and sellers of securities without taking positions in the securities themselves. Brokers earn commissions or fees for executing trades on behalf of clients.
As a dealer, the firm trades securities for its own account, buying and selling securities to profit from price movements or market-making activities.
Broker-dealers may provide a range of services, including executing trades, underwriting securities offerings, providing investment advice, and managing portfolios.
Broker-dealers are subject to regulatory oversight and are required to adhere to securities laws and regulations to protect investors and ensure market integrity.
What is the difference between net realisable value and net book value
The net book value is the value of an asset on the balance sheet, calculated by subtracting accumulated depreciation from the original cost of the asset. Net realizable value, on the other hand, is the amount of cash that a company expects to receive from selling an asset, after deducting any selling expenses. Essentially, net book value reflects the historical cost of an asset, while net realizable value reflects its expected market value.
Immobilised
↔immobilised doesn’t mean it cannot move, instead it means it is held within a reputable depositary and a buyer is likely to continue to be is the shares are bought by someone else
Collective Investment Schemes / mutual funds
these are schemes that :
Invest in transferable securities
Publicly marketed
Open-ended
pro rata
proportionally/ in proportion to
Structured Product. also referred to as (3)
S. Investment Products, are products that’s performance depends on an underlying asset.
growth bonds,
certificates and investment notes
