Capital-market glossary

A–D

Ask

The lowest price at which a seller is currently willing to sell a security.

Bid

The highest price a buyer is currently willing to pay for a security.

Capital gain

An increase in value realized when an asset is sold for more than its purchase price, before costs and any applicable tax.

Dividend

A distribution a company may make to shareholders. A dividend is not guaranteed and normally requires the appropriate company approval.

E–L

ECMA

The Ethiopian Capital Market Authority, the public regulator responsible for supervising and developing Ethiopia’s capital market.

ESX

The Ethiopian Securities Exchange, the organized marketplace on which eligible securities can be admitted and traded under its rules.

Index

A calculated measure designed to summarize the performance of a defined group of securities under a published methodology.

Limit order

An instruction to buy no higher than a stated price or sell no lower than a stated price. Execution is not guaranteed.

Liquidity

How readily an asset can be bought or sold without a large delay or price impact. Young markets can have limited liquidity.

Listed company

A company whose eligible securities have been admitted to an exchange. Listing is not a recommendation or guarantee of performance.

M–R

Market capitalization

A company’s share price multiplied by the relevant number of shares. The result depends on which share-count definition is used.

Market order

An instruction seeking execution at the best available price. In a thin market, that price may differ materially from the last observed trade.

Prospectus

A formal disclosure document describing an offer or listing, including the issuer, financial information, terms and risk factors.

Record date

The date used to determine which shareholders are eligible for a corporate action such as a dividend, subject to the issuer’s official terms.

Return

The gain or loss on an investment over a period, which may include both price change and cash distributions.

S–Y

Settlement

The completion of a securities transaction through the delivery of the security and payment of the agreed amount.

Share

A unit of ownership in a company, carrying the rights defined by law and the company’s governing documents.

Spread

The difference between the best available bid and ask prices. A wide spread can indicate limited liquidity or greater trading cost.

Volatility

The degree to which a price changes over time. High volatility means larger or more frequent movements, not a guaranteed direction.

Yield

Income expressed relative to a price or principal amount. The exact calculation depends on the instrument and should always be stated.