Money Glossary
ATMs
automatic Teller machines.
Barter
exchange of goods and services
Contract for Difference
An equity derivative representing theoretical order to buy or sell a certain number of shares, based on the spread between the highest buying and lowest selling prices quoted on the stock exchange
Derivative
A financial contract whose value is based on, or derived from, another financial instrument (such as a bond or share) or a market index (such as a share-price index)
Discounted Cash Flow
A method of measuring the return on capital or funds invested, which takes into account the time value of money
Dividend Yield
The return on an investment calculated by dividing the dividend yield per share by the current share price
Earnings Per Share
Calculated by dividing a company’s earnings by the number of shares on issue to show the profit earned in terms of each share. Estimated earnings per share is based on forecast earnings for the next financial year.
EFTPOS
electronic funds transfer at point of sale. Is a system where customers use a card and Pin to pay for goods and services in a shop
Franked Dividend
A dividend paid by a company out of profits on which the company has already paid tax. The investor is entitled to an imputation credit or a reduction in income tax up to that amount.
Gearing
The extent of borrowings against equity in an asset; the percentage of capital a business employs that is debt, calculated most easily by dividing total liabilities by total assets.
Market Capitalisation
The value of a company as measured by the number of shares in the company multiplied by the current market value of those shares.
PIN
personal identification number
Price-Earnings Ratio
Considered to be a good yardstick for measuring the value of a company’s shares, it shows the relationship between the market price of the shares and the earnings per share. This is calculated by dividing the share price by the earnings per share. Estimated price-earnings is based on forecast earnings.
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