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Share Market Terminology: Part 2

<<<< Share Market Terminology: Part 1

1.     NASDAQ

The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange located in New York City. “NASDAQ” originally stood for “National Association of Securities Dealers Automated Quotations Systems,” but the exchange’s official stance is that the acronym is obsolete. It is the largest electronic screen-based equity securities trading market in the United States and fourth largest by market capitalization in the world. As of January 13, 2011, there are 2,872 listings. The NASDAQ has more trading volume than any other electronic stock exchange in the world.

NASDAQ has three indices; NASDAQ Composite, NASDAQ-100 and NASDAQ Biotechnology Index. Its market capitalization is US$3.08 trillion (Aug 2010).

2.     Blue Chip

A blue-chip stock is stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good times and bad. The most popular index which follows blue chips is the Dow Jones Industrial Average. The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry.

3.     Book Value

In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance. For assets, the value is based on the original cost of the asset less any depreciation, amortization or impairment costs made against the asset. Traditionally, a company’s book value is its total assets minus intangible assets and liabilities. However, in practice, depending on the source of the calculation, book value may variably include goodwill, intangible assets, or both.

4.     Market Capitalization

Market capitalization (often market cap) is a measurement of size of a business enterprise (corporation) equal to the share price times the number of shares outstanding (shares that have been authorized, issued, and purchased by investors) of a publicly traded company. As owning stock represents ownership of the company, including all its equity, capitalization could represent the public opinion of a company’s net worth and is a determining factor in stock valuation. Likewise, the capitalization of stock markets or economic regions may be compared to other economic indicators. The total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007 and rose as high as US$57.5 trillion in May 2008 before dropping below US$50 trillion in August 2008 and slightly above US$40 trillion in September 2008.

5.     P/E Ratio

The P/E ratio (price-to-earnings ratio) of a stock (also called its “P/E”, or simply “multiple”) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. P/E reflects the capital structure of the company in question. P/E is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower P/E ratio. The P/E ratio has units of years, which can be interpreted as “number of years of earnings to pay back purchase price”, ignoring the time value of money. In other words, P/E ratio shows current investor demand for a company share.

6.     Spread

The difference between the price paid for a bond (the bid) and the price at which it is offered to an investor (the offer).

7.     Preference Share

Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company’s assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders.

8.     Equity share

Equity shares are those shares which are ordinary in the course of company’s business. They are also called as ordinary shares. These shareholders do not enjoy preference regarding payment of dividend and repayment of capital. Equity shareholders are paid dividend out of the profits made by a company. Higher the profits, higher will be the dividend and lower the profits, lower will be the dividend.

9.     Convertible Preference Share

These are preferred issues that the holders can exchange for a predetermined number of the company’s common stock. This exchange can occur at any time the investor chooses regardless of the current market price of the common stock. It is a one way deal so one cannot convert the common stock back to preferred stock.

10. Debenture

The term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note.

Debentures are generally freely transferable by the debenture holder. Debenture holders have no rights to vote in the company’s general meetings of shareholders, but they may have separate meetings or votes e.g. on changes to the rights attached to the debentures. The interest paid to them is a charge against profit in the company’s financial statements.

11. Mutual Fund

An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.

12. Open-end Mutual Fund

A fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Open-end funds raise money by selling shares of the fund to the public, much like any other type of company which can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most open-end funds, shareholders are free to sell their shares at any time, although the price of a share in an open-end fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of open-end funds include diversification and professional money management. Open-end funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment.

13. Closed-end Mutual Fund

A fund with a fixed number of shares outstanding, and one which does not redeem shares the way a typical mutual fund does. Closed-end funds behave more like stock than open-end funds: closed-end funds issue a fixed number of shares to the public in an initial public offering, after which time shares in the fund are bought and sold on a stock exchange, and they are not obligated to issue new shares or redeem outstanding shares as open-end funds are. The price of a share in a closed-end fund is determined entirely by market demand, so shares can either trade below their net asset value (“at a discount”) or above it (“at a premium”).

14. Asset Management Company (AMC)

An Asset Management Company (AMC) is an investment management firm that invests the pooled funds of retail investors in securities in line with the stated investment objectives. For a fee, the investment company provides more diversification, liquidity, and professional management consulting service than is normally available to individual investors.

The diversification of portfolio is done by investing in such securities which are inversely correlated to each other. They collect money from investors by way of floating various mutual fund schemes.

15. Front End Load

A sales charge paid when an individual buys an investment, such as a mutual fund, limited partnership, annuity, or insurance policy. The load is clubbed with the first payment made by an investor, so the total initial payment is higher than the later payments. The purpose of a load is to cover administrative expenses and transaction costs and sometimes to discourage asset turnover.

16. Back End Load

A sales charge or commission paid when an individual sells an investment, such as a mutual fund or an annuity, intended to discourage withdrawals.

17. Company

A company is a form of business organization. It is a collection of individuals and physical assets with a common focus and an aim of gaining profits. This collection exists in Law and therefore a company is considered a “Legal Person”.

18. Common Seal

A common seal (sometimes referred to as the corporate seal or company seal) is an official seal used by a company. Company seals were predominantly used by companies in common law jurisdictions, although in modern times, most countries have abrogated the use of seals.

Traditionally, the seal was of some legal significance because the affixing of the seal signified that the document was the act and deed of the company, whereas when a document was merely signed by a director, then that was deemed to be an act carried out on behalf of the company by its agents, which was subject to applicable restrictions and limitations under the ordinary law of agency.

Corporate seals are generally only used for two purposes by corporations today:

Documents which need to be executed as deeds (as opposed to simple contracts), may be executed under the company’s common seal

Certain corporate documents, for example share certificates are often issued under the company seal (and some countries required that share certificates be issued under the common seal)

19. Company Secretary

A company secretary is a senior position in a private company or public organization, normally in the form of a managerial position or above. In the United States it is known as a corporate secretary.

The Company Secretary is responsible for the efficient administration of a company, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the Board of Directors are implemented.

Despite the name, the role is not a clerical or secretarial one in the usual sense. The company secretary ensures that an organization complies with relevant legislation and regulation, and keeps board members informed of their legal responsibilities. Company secretaries are the company’s named representative on legal documents, and it is their responsibility to ensure that the company and its directors operate within the law. It is also their responsibility to register and communicate with shareholders, to ensure that dividends are paid and to maintain company records, such as lists of directors and shareholders, and annual accounts.

20. Subsidiary Company

A subsidiary, in business matters, is an entity that is controlled by a separate higher entity. The controlled entity is called a company, corporation, or limited liability company; and in some cases can be a government or state-owned enterprise, and the controlling entity is called its parent (or the parent company).

A parent company does not have to be the larger or “more powerful” entity; it is possible for the parent company to be smaller than a subsidiary, or the parent may be larger than some or all of its subsidiaries (if it has more than one). The parent and the subsidiary do not necessarily have to operate in the same locations, or operate the same businesses, but it is also possible that they could conceivably be competitors in the marketplace. Also, because a parent company and a subsidiary are separate entities, it is entirely possible for one of them to be involved in legal proceedings, bankruptcy, tax delinquency, indictment and/or under investigation, while the other is not.

The most common way that control of a subsidiary is achieved, is through the ownership of shares in the subsidiary by the parent. These shares give the parent the necessary votes to determine the composition of the board of the subsidiary, and so exercise control. This gives rise to the common presumption that 50% plus one share is enough to create a subsidiary. There are, however, other ways that control can come about, and the exact rules both as to what control is needed, and how it is achieved, can be complex. A subsidiary may itself have subsidiaries, and these, in turn, may have subsidiaries of their own. A parent and all its subsidiaries together are called a “group”, although this term can also apply to cooperating companies and their subsidiaries with varying degrees of shared ownership.

Subsidiaries are separate, distinct legal entities for the purposes of taxation and regulation. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it.

Note

This list is being compiled using definitions provided at various sources. I tried my best to give the best general explanation of all the term. If any term need correction or improvement in its explanation, please use the comment section to do so. I will look through it.

Role of Coachings in IIT JEE selection

Indian Institute of technology (IIT) are the most prestigious institutes of India. It’s the dream of every science students to study at IIT. One may get admission at any IIT after clearing a test organised by the all the IITs. It’s called IIT JEE. As there are many students dreaming to study at IIT or be an IITian. The competition is very tough to clear. Almost 350,000 students each year appear in IIT JEE. Out of which nearly 10000 students are selected. We can find coaching institutes every where which helps students to clear IIT JEE. It is a fact that coaching institutes for IIT JEE are more than double in number of total students selected in IIT JEE. So, the question arises naturally. Are these coaching institutes play any role in the selection for IIT JEE?

Coaching institutes for IIT JEE can be found at almost every corner of street in every town of India. Size and strength of students vary at these places. But, all have same purpose to give students guidance for clearing IIT JEE. No doubt many fail to produce even a single IITian in lifetime. A large number of these institutes teach without proper procedure. There are very kind of institutes. Institutes operating with one teacher and one classroom to institutes with branches in every part of the country. Tuition fees in these institutes also vary from institutes to institutes and city to city. We can say it is a business. Apart from collecting taxes from these institutes, government play no role to monitor the benefits of the students. There are no regulations at all. Any one can teach or cheat students with the dream to be future IITian. Let us see the role of coaching institutes in IIT JEE preparation.

We will discuss here role of various types of coaching institutes for various types of students. We will not excluding the dullest students from our group of students. As they are no where around IIT JEE. They should not waste their time for IIT JEE.

1. Big Institutes

In this category, we will discuss about institute which are well-known in every part of India. These institutes have branches in various city. They send a lot of students to IIT each year. Some well-known names are FIITJEE, Brilliant Tutorials (BT), Bansal Classes, Vidya Mandir, Apex Academy, Narayana, Chaitanya, Career Point, Resonance and Akash. These are some of the well-known names. FIITJEE, BT and Bansal Classes stands in front this row. They are renowned institutes which have given the most students to IIT. So, how does they help students to clear IIT JEE. Does they give them a syrup or tonic to drink or eat. No, they don’t. Let’s discuss how they give such a great results year after year.

BT and Bansal are old very institutes. They started and develop the coaching system for IIT JEE. One more name come in the list, Agrawal Classes. These institute since 80′s are teaching for IIT JEE. They develop a study material on the basis of 10th syllabus which could help the student to grasp the concept needed in the IIT JEE exam. In the beginning there were not many names in the market. So, it was easy for them to get quality students and guide them. As the quality students are with them. They produced good results each year.

Currently, these institutes recruit best teachers to guide the students along with good study material. They organize tests and doubt clearance session regularly. Also, they give students bunch of questions to solve after every concept is discussed. Institute concentrate on more and more practice and doubt clearance. On an average, in these institutes students solve 3-4 times more questions than in regular studies. So, by constant practice and doubt clearance, students gain pace and accuracy. This helps them to clear IIT JEE. They don’t have to think a lot about preparation strategy and other tension. Institutes generally take care of every problem. The institute’s think tank keeps a keen eye on the process which help the student in selection. As the institute have money power. They spend it to test their methods and improve if needed to change. They have the best team of teachers. They generally get early signs of changes that could be possible in coming IIT JEE exam. Overall, their methods helps students to develop a bit. No doubt.

Lets see how in the present time these big institutes are for different IQ level students. For IIT JEE, lets see students with intelligence level as intelligent, average, below average and dullest. As we have said earlier we will not discuss about dullest students.

A. Intelligent Students:

These students are those who have the highest chance to be an IITian. In any class of 50, one may find 5-10 students from this category. They are born intelligent and many are laborious too. By proper guidance of these institutes. These people develop themselves to solve the toughest and trickiest questions with ease. They secure high ranks with the help of these institutes.

B. Average Students:

Students in this category are mainly those who are either laborious but not intelligent else intelligent but not laborious. Also, those who are a bit of both intelligent and laborious come in this sections. These students need encouragement and proper guidance to make it to IIT. These institutes give them lots of question to solve. By the practice, environment and luck many students of this group with lower ranks make their way to IIT. Yeah luck is also a factor for them to clear IIT JEE. Even slight mistake in the preparation could cost them an IIT seat.

C. Below Average Students:

This category of students too gets some benefit from these institutes. They are not IIT material. Also, not much good for low-level exams. But, these institutes with lots of practice to them, helps them to clear regional exams. That’s high achievement for them.

Remember, I’ve pointed out that in every aspect these institutes are beneficial for the students. Then, why not every students take admission in these institutes. The reason is simple. They are very much costly too. Yeah, these institutes have a very high fees. Not possible for every one to pay in a country like us. They have full AC class rooms. Their high paying teachers can’t teach in non-AC class rooms. Also, many students who study there are AC addicted. So, they have to keep up an AC environment. Even in some circumstance they give scholarship to poor students. That’s few and selected students. That can’t help everyone. So,lower middle class students who are the most in numbers go for other sort of low fees or local institutes .

2. Local Institutes

By local institute, I mean those institutes which are popular but just in few towns. Like Paradise Institute, Nutan Institute in Patna; Prerna Classes in Tatanagar; JSR Classes in Varanashi; Bakliwal Tutorials in Pune. Every city or town have many such institute which are popular locally. Some them who have big business and some have just. They generally don’t have a regular think tank team to develop strategy. Administration is just in hand of one or two people who are teachers too. Not all but some of them provided printed study material. But, they usually don’t organize weekly test. Daily question’s hand outs. Yeah some of them do. Teachers in these institutes are almost all good. But, due to lack of strategy. They don’t work out as a team.

Lets see how they give benefit to the students.

A. Intelligent Students:

They have the best chance to get in IIT. But, due to lack of strategy and practice. They don’t make it to top ranks in IIT JEE. If we look at the selection every year in IIT. In top 200 these institutes have very less share. Instead of the fact that they are much more in numbers. The reason is simple they lack to develop students. Those who gets selected are due to just guidance and intelligence. Some of them who get right teachers and are extra laborious with intelligence make it to top ranks. But, still all this combination can be replaced with a common word Luck. If the student is lucky they make it to top 100 or 200. Else generally, they fill higher ranks of IIT JEE.

B. Average Students:

Usually average students from these institutes fail to clear IIT JEE. They clear other exams. But, IIT looks far from their reach from such institute. Reason can be seen clearly. There is not a strong administration who have plans for everyone. Institute give no guidance to teacher to take care of everyone. Teachers too like to be more around the sharp brain. They give less extra time for clearing various doubts of these kind of students. With doubts in their mind these students fail to solve the tricky questions of IIT JEE. Many of them secure ranks in regional or other exams.

C. Below Average Students:

Students in this category hardly make any impact in competitive exams from these institutes. Some of the lucky ones gets selected in regional exams.

3. Subject based Tuition

This is the category in which comes subject specific teacher. Institute which teach only one subjects. Actually, these institutes are run by a single teacher. As one single can’t teach all the three subjects. Some even teach sub-subject specific . Mainly, we see them in Chemistry. Teachers who teach Organic avoid inorganic. Some time they just teach organic. Sometime they teach all, but focus only on one of the favorite.

This is the most clustered category of all. Most number of misguided students study in this category. There is no one who makes strategy for them. The teachers take care of just their subject. As there is no coördination between other subject’s teachers. It’s very hard to study inter-related concept. Especially, those portions of Chemistry and Physics which depends on Mathematics. Also, students face timing problem. They have to adjust the time schedule for all three subjects. Not just that, as the classes of each subject have different teacher. They have to run from one place to other for classes. This exhausts the students. Also, it kills valuable time. Sometimes, tiredness causes losing interest in study.

This method of coaching is no doubt beneficial if we consider money. But, else success only depends on luck. It is most widely faced problem. Not all three subjects teacher are liked by the students. For IIT JEE, all three part should be balanced. So, even though one finds best teacher for Math. There is no chance of success, if one can’t find good teacher for Physics and Chemistry too.

The quality of education system is most damaged by this category. Any one who wants to teach for IIT JEE can open institute and misguide others. It is true that the best teachers of India teach through this system. But, it is also true that the number of worst teacher is more than good ones. So, students gets exploited in this system most.

Lets see how this group affects students:

A. Intelligent Students:

All depends on luck. If luck helps and students gets tension free, good teachers in every subject, students can clear JEE. But, that’s the rarest case. Only few are lucky to get all three teachers good. If the student is most brilliant one then only nothing can stop him to get selected. Else miserable chance of selection. Yeah students get selected in various regional or other exams. But, IIT is far from them. Also, one more important point, there is very less hope to get good ranks in IIT JEE. There is no good practice for the students. Some teachers try to give more and more practice, rest is miserable.

B. Average students:

If luck is not with the student very little hope. Even if luck is with students that they get all three good teachers. Almost no hope for IIT JEE. Just a bit hope for regional level exams.

C. Below average students:

Very less chance for these students to get any thing from this system of coaching.

4. Institutes in Kota, Rajasthan

I have discussed about these institutes in detail in my last post. Click Here.

Remarks:

  • It should be you who should decide in which category of student you come.
  • All above is bullshit, if one is laborious and works hard. Laborious and hard-working student can change all the law. So, be laborious nothing will matter much.

I’m giving links to articles written by me on similar topics:

  1. Kota: Paradise for IIT JEE Aspirants
  2. How to Prepare for IIT JEE?
  3. Hopes Beyond IIT
  4. IIT JEE: What should be the strategy for repeaters?
  5. IIT JEE: What should be Strategy for Partial Droppers?

 

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Share Market Terminology: Part 1

  1. Sensex

    Sensex is the short form of Sensitive Index. The Sensex is value-weighted index composed of 30 stocks. The Sensex is regarded as the pulse of the domestic stock markets in India. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. It is also called as BSE 30.

  2. Nifty

    Nifty or Nifty 50 is the leading index for large companies on the National Stock Exchange of India. The Nifty is a well diversified 50 stock index accounting for 21 sectors of the economy. During 60s and 70s this term was used to denote 50 popular large cap stocks on the New York Stock Exchange.

  3. Bull

    Bull means cause or attempt to cause prices to rise (in the stock exchange).

  4. BEAR

    Investor who believes a share or the overall security market will go down.

  5. Squaring Off

    Square off means to settle the position. If someone square off a trade, it means he have no position at the end of the day – only profit or loss. When you give cash order it means you give order with intention to take delivery. Thus, if you change your mind and want to sell the stock the same day (buy in case of a sell), you have to notify the broker that you are changing your trade from delivery based trade to intraday trade and thus squaring off your position.

  6. RALLY

    A rally is a term used to describe a sudden rise in stock prices, especially after a period of falling ones. For example, if the stock market drops in the morning and investors rush in to buy companies at the cheaper prices, the stock market has rallied.

  7. Crash

    A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth.

  8. Correction

    A correction is a short term price decline of 5% to 20% or so. A correction is a downward movement that is not large enough to be a bear market.

  9. Bonus Shares

    The term bonus means an extra dividend paid to shareholders in a joint stock company from surplus profits. When a company has accumulated a large fund out of profits – much beyond its needs, the directors may decide to distribute a part of it amongst the shareholders in the form of bonus. Bonus can be paid either in cash or in the form of shares.

  10. Dividend

    Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend.

  11. Book Closure Date

    When shares of a joint stock company invariably change hands during market trades, identifying the owner of some shares becomes difficult. So it is difficult to pass on certain benefits (like share bonus issue, splits and dividend payments) to shareholders.

    So, when a joint stock company declares dividends or bonus issues, there has to be a cut-off date for such benefits to be transferred to the shareholders. This date is termed as “Book Closure” date or “Record Date”. It is the date after which the company will not handle any transfer of shares requests until the benefits are transferred. Only shareholders marked in the company’s register at the Book Closure Date or the Record Date would be entitled to receive these benefits. In other words, shareholders that are on the company’s records as on that date are eligible for these benefits.

  12. Bonds

    A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals.

  13. Splits

    A stock split increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur.

    Ratios of 2-for-1, 3-for-1, and 3-for-2 splits are the most common, but any ratio is possible. Splits of 4-for-3, 5-for-2, and 5-for-4 are used, though less frequently. Investors will sometimes receive cash payments in lieu of fractional shares.

    It is often claimed that stock splits, in and of themselves, lead to higher stock prices; research, however, does not bear this out. What is true is that stock splits are usually initiated after a large run up in share price. Momentum investing would suggest that such a trend would continue regardless of the stock split. In any case, stock splits do increase the liquidity of a stock; there are more buyers and sellers for 10 shares at $10 than 1 share at $100. Some companies have the opposite strategy: by refusing to split the stock and keeping the price high, they reduce trading volume and volatility. Berkshire Hathaway is a notable example of this.

  14. Futures

    Investment contracts which specify the quantity and price of a commodity to be purchased or sold at a later date. On contract date, the buyer must take physical possession or make delivery of the commodity, which can only be avoided by closing out the contract(s) before that date. Futures can be used for speculation or hedging.

  15. Index Trading

    Index Trading is a fairly new concept based on short term financial trades or wagers. Unlike most other emerging ways to Trade on Share markets, Index Trades are mostly contracts bought for a fixed duration with a fixed return (often up to 97% of the investment).

    Index trades rely on the trader’s ability to predict whether a Share index will effectively rise or fall over a set period.

    If the trader has picked the correct direction and their trade is successful once the time has elapsed then they are generally paid out on the agreed return within minutes. This has added to the recent popularity of Index Trading however it still hinges completely on one’s ability to predict Share index movements and it is common knowledge that such a thing is not easy.

  16. Trading on Margin

    Margin buying or margin trading is buying securities with cash borrowed from a broker, using other securities as collateral. This has the effect of magnifying any profit or loss made on the securities. The securities serve as collateral for the loan. The net value, i.e. the difference between the value of the securities and the loan, is initially equal to the amount of one’s own cash used. This difference has to stay above a minimum margin requirement, the purpose of which is to protect the broker against a fall in the value of the securities to the point that the investor can no longer cover the loan.

    Most investors buy the futures, but there are times when margin trading makes more sense. If a stock is not in the futures list, the client can go for margin funding.

    Since futures are generally not available beyond one or two months, if the client has a longer view, then margin trading is better. Also, some brokers offer lower interest rates on margin trading than the prevalent rates in the futures market.

  17. Stock

    The capital stock (or just stock) of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors. Stock is distinct from the property and the assets of a business which may fluctuate in quantity and value.

  18. Bid

    The bid for securities (such as stocks, futures contracts, options, or currency pairs) is the difference between the prices quoted (either by a single market maker or in a limit order book) for an immediate purchase.

  19. Broker

    A stock broker or stockbroker is a regulated professional broker who buys and sells shares and other securities through market makers or Agency Only Firms on behalf of investors. A broker may be employed by a brokerage firm.

    A transaction on a stock exchange must be made between two members of the exchange—an ordinary person may not walk into the New York Stock Exchange (for example), and ask to trade stock. Such an exchange must be done through a broker.

  20. Dow Jones Industrial Average

    The Dow Jones Industrial Average (DJIA), also referred to as the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. It is now owned by the CME Group, who is the majority owner of Dow Jones Indexes. The average is named after Dow and one of his business associates, statistician Edward Jones. It is an index that shows how 30 large, publicly owned companies based in the United States have traded during a standard trading session in the stock market. It is the second oldest U.S. market index after the Dow Jones Transportation Average, which was also created by Dow.

    To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a Divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; which made the DJIA at first, a simple arithmetic average.

Note

This list is being compiled using definitions provided at various sources. I tried my best to give the best general explanation of all the term. If any term need correction or improvement in its explanation, please use the comment section to do so. I will look through it.

>>>> Share Market Terminology: Part 2

How to Find a Perfect Domain Name at the Perfect Price

A Perfect Domain Name

Are You in Search for a Perfect Domain Name

Domain name is the most important part of your website. Normally, people remember websites by domain names only. A domain name helps a lot in advertisement by mouth or any other form of advertisement. Yahoo, Google, Facebook is remembered by its domain name only.

In the overcrowded web world, it is very hard to find a suitable domain name. As most of the names we check for the domain name are already taken. So, one have to think out of the box to get a perfect domain name.

It is to be noted that almost 90 % of domain names or even more which are registered are either parked (to be sold) or else used by websites with daily visitors less than 10. As of 29th October, 2012, there are in total 132,406,473 registered domain names. Almost all the domain names with single word is owned by some influential web giants. These are called Premium domains. Many of these are not in use or redirect to some other website.

Let’s talk about features that a good domain name should possess.

Match your website name

The foremost important thing about a website name and domain name is that both should match. If someone finds your website through a search engine, he will not look for the domain name to memorize it. Rather, he will see the name of the website written in bold. If the name of the website is “Fire Fighter“, but the domain name is TheFireFighter.com. Next time when the visitor will try to go to your website, chances are heavy that he/she will type FireFighter.com instead of TheFireFighter.com and that’s it, one customer goes to your competitor’s website instead of yours.

If you have a business with brand name and you want a website for it, it will be best if you could get the domain name with the same name as your brand name. However, one should understand how much important is the domain name matching your brand name and how much more the revenue will be if both matches. Like take the example of the latest James Bond movie Skyfall. The official website for this movie is hosted with domain name Skyfall-Movie.com. How much revenue the producer of this movie will lost due to naming the website as Skyfall-Movie.com rather than Skyfall.com. I doubt it to be even a single cent.

In the search of a perfect domain name at perfect price. The example of Skyfall is the perfect example to understand importance of price. In the present world of search engines, people memorize the names of only those domain names which they think they have to visit again and again. What I will suggest is to go for same name as your brand strictly only if it is an internet specific product. Like take the example of SEOElite.com. This website is promoting a software named SEO Elite. Hence, if they choose TheSEOElite.com as their domain name chances are visitors will go to SEOElite.com if they see link of both the website in Google.

Match your contents

The domain name gives an idea of contents of the website. Like one will visit WallColours.com expecting it will contain information about wall painting ideas and combinations. If the contents will differ the expectations of the visitors, they will not even wait for a sec to go away from your web page. This is the reason why generic domain name are so highly priced. Both search engine and internet users think that Perfume.com would contain perfumes related contents. If the content satisfies both, the website will be popular both among the visitors and the search engines. However, If the content is even slightly differs from expectation it will lost its position in Google search result and visitors satisfaction.

Easy to memorize and type

This is a characteristic which everyone wants in their domain name as must. Google, Yahoo is perfect example of this. Even if in the dictionary there is no word as used by you for the domain name. It should be easy to memorize and type. Like Flippa.com, Sedo.com.

Nothing matters if your content is good

The foremost important characteristic for a website is not its name or domain name. It is the content. Every search engine will give you ranking and send the traffic based on your contents. Website like WikiLeaks or LinkedIn are popular due to its contents. Hence, spend optimum amount of money for a perfect domain name and extra for the content’s quality.

Now first estimate the money you are willing to pay to buy a domain name. It should be noted that domains are available at as low as $ 1 (Godaddy limited period offer). If you search well anytime you may find a domain at around $ 2. My point is original price of the domain is very low. A domain registrar’s basic cost to register a domain is just 18 ¢ as ICANN fees. Other features like privacy protection, etc. are surplus cost. First think whether you want a fresh domain, existing domain, expired/deleted domains. I’ll cover all of them here.

Fresh Domains

Fresh domains are cheapest. However, forget that you will get a short and simple domain name easily. It is impossible to find a single word domain name as available. You need to use some trick to find a satisfactory domain name. Here are few points and tricks. Please mention in comments if you know any extra tricks.

  • It is not required that your domain name should be .com only. There are many well-known domain names which are .org, .info or .net. However, this is also true that in top 100 Alexa websites, there are only two .org websites (Wikipedia.org and CraigList.org), no .net websites and apart from .com only country specific TLD websites are available. But, it is not due to some preference given to .com by Google in ranking and they are getting extra traffic. Instead, it is just because .com is the most preferred TLD among webmasters.
  • One can find a nice domain name by using two or three different words. For those who are new to domain name search this might look a good idea. However, this is a very old trick. Hence, it’s not easy to find a fresh domain name by this method too. Combination of two usual words are hard to be find free for .com. Like PerfectPrice.com, SolidChair.com, etc. But, if you are OK with other international TLDs like .org, .net or .info. You might get it.
  • If we go in the depth of a domain name science, we must know rules for choosing a domain name. A domain name could be formed using English alphabets, numbers 0 – 9, and the symbol “-”. The length of the domain name should be maximum 63 characters excluding extension. The domain name can neither start nor end with the symbol. Symbol can be repeated for max two times like a–z.com, a–b–c–d–e.com.
  • After using the above information, there are enormous number of domain names you could find. E.g. numbers are used by many like 1and1.com or One2Three.com. However, there are various special numbers which are easy to remember. But, hardly in use. Like 786, 512, 111, 1234, etc. One may use it with some other words to find an easy to remember domain name.
  • One can easily get a domain name spelled in any other language other than English. Like JaiHo.com (famous song from the movie Slumdog Millionaire). If you are targeting a specific country netizens. Then, it is the best way to get a suitable domain name. Even, if your target audience is not country specific you can go for those words, just it should be easy to spell and remember. The beauty of these domain names is that you can easily get a good domain name by this way. Like GetVidya.com a popular educational website in India. Get is an English word with Vidya which is a Hindi word for education.
  • Now, the last idea I’m giving is cool one. It is called Domain hack. One of the most popular example of this is Del.icio.us which now redirects to Delicious.com. This sharing website started with a cool looking sub-domain address Del.icio.us. There are many TLDs which could be used to make such a cool domain name. Like Backpa.in, Calcul.us, Anyti.me, Moroc.co, etc.

Existing Domain for Sell

While searching for domain you will found out that most of the domains which are already taken are parked or listed for sale. Their prices vary from $ 20 to thousands of dollars. Now, what are the factors which determine appropriate value for such a domain?

Buyer

The prospective buyer is the most important factor in determining the value of a domain name. A buyer who intends to develop a website related to his business would pay more than one who wants to start a totally new business for online ecommerce. Suppose a luxury car dealer whose companies name is Triangle Sales wants to buy a domain name for his company’s website. He must be happier to get the domain name TriangleSales.com than FerrariDealer.com or LuxuryCars.com. Reason is very simple and obvious. He is not trying to develop a website to sell the cars online. He wants more and more customers to come to his store to buy the car. Microsoft Corporation would not like their website’s domain as Software.com. They will spend more to get Microsoft.com than Software.com.

Last year, Facebook acquired fb.com from American Farm Bureau Federation at a whopping price of $ 8.5 million. Last time, when Facebook.com was purchased by them in 2005, its price was at $ 200,000. Only Mark Zuckerberg could tell us how much had the original domain name of Facebook TheFacebook.com cost him.

The point here is the brand and requirements determine the price of a domain name. Today eBay.com domain is worth millions, but without its brand value bay.com would have cost more to buy than eBay.com.

The point is if you think a particular domain is important for your websites. Then, the price will be determined by your ability to pay and your willingness to buy the domain name.

Keyword and Niche market relevance of the domain

Domain name which are made of keywords which represents a particular niche market is worth more than domain name which don’t have any such quality. Like HostingReviews.com, RentACar.com, Vacancy.com, etc. You don’t have to ask anyone if these domains are in use what would be contents of these websites, plus these contains exactly same words which people might search in Google. Everyone wants that the domain name should be relevant to the contents he/she is going to show on the website. A business card manufacturer will be willing to pay more if he could get a name which resembles his expertise.

There are various exception to this. Like Orkut.com, Google.com, etc. It may help if you get a domain name which explains the contents of your website. But, the world does not ends if such domain is costing more. The most important thing is contents and presentation. PayPal.com would be more successful if its domain name Pay.com. I doubt it. Twitter would have more users than Facebook due to its name, no. Twitter, Google, yahoo became popular due to its usefulness, due to its features, not due to its name, which is not even relevant to the features due to which it became popular. These are neutral words.

Hence, if you find a low priced domain name relevant to your contents or use. It’s good. Else, you can do a little more search, look for a lower priced domain and do some more work on contents.

Top Level Domain

The extension name is very important in the valuation of a domain name. Internet is still dominated by .com. There is 4x -10x difference between a .com and any other premium TLD.

The importance is not because the webmasters prefer .com. Instead it is due to the users. Netizens have normal habit to remember the domain name without its extension. Wikipedia is so much popular. Still, many visitors directly types Wikipedia.com to go to Wikipedia.org. They don’t even notice that Wikipedia is .org not .com (Wikipedia.com redirects to Wikipedia.org). While searching in Google, people will simply type Google.com. They never even cares whether the result is provided by Google.com or Google.co.uk or Google.co.in. Hence, while buying a domain name .com will cost you more to buy.

Symbol and numbers

A domain name with symbol and number is very less worth than words. TutorsForHire.com is more worthy than Tutors4Hire.com. MobileWorld.com is more valuable than Mobile-World.com. Owner of both MobileWorld.com and Mobile-World.com will use the name Mobile World as their websites name. However, the visitor will just remember name of your website and in both case they will go type MobileWorld.com.

Length of a Domain

Number of characters allowed for a domain is 63. However, one may rarely see a domain name having more than fifteen characters. The most important aspect of length of domain name is longer the domain, longer will be the time to type it. Short domain name is easy to type. Like ebay.com. But, people use copy and paste or bookmarking function for longer domain. Hence, webmasters prefer short domain name. No doubt high price of FB.com was result of this factor too.

Common Used Group Words

Domains with commonly used group words have higher value than other group of words. Like GoForIt.com, RentACar.com, GrabIt.com, etc. These are easy to remember and tell.

Backlink for a domain

There are few websites which were running full fledge before the owner thought of selling it. Now, these websites have some backlinks. If the domain name reflects a particular niche market or is keyword rich. Then, backlinks would be useful in two ways. You will have some quality backlinks for SEO, plus you may get some visitors.

Misspelled Name

Misspelled name is normally very bad choice for using as a domain name. The reason is very simple. Your visitors will find it hard to remember the name. Quality.com is easy to remember, but not qualiti.com.

In few cases where, the misspelled domain comes from misspelled word of some very popular domain which are in top 1000 websites. It is possible that you will get some traffic. But, those visitors will just left your site when they realize their mistake.

Age of a domain

Age of a domain really helps in getting higher Pagerank. However, there is one confusion here among many. Google do give some benefit to older domains. However, for them age of a domain becomes zero when it changes ownership. Hence, it plays no role in estimating the price of a domain. As there will be no benefit for the age of the domain once its WHOIS data changes.

One should keep in mind that each domain is unique. One can just estimate a price for a domain name. But, finally which domain will give you more income will not depend on its name. It will depend on the quality of work given to develop it into a quality website.

If you are looking for some premium domain name which are up for sale. Use the above search tool. Apart from points mentioned above look for a domain which are parked and are up for sale. You could even target active website with very less traffic. These websites may sell their whole website along with domain name if offered price is even close to $ 50.  Once you find that the owner is interested in selling the domain. If the asking price less than $ 100. Contact the seller directly and negotiate a deal. However, if it is more than $ 100, you can use the Godaddy Domain Buy Service as an agent to negotiate the price for domains. Normally, seller don’t know the exact value of their domain and they keep a higher price. GoDaddy being a professional will contact on your behalf the current owner of the domain and negotiate with the owner for the lowest possible price of the domain, but up to your maximum specified limit. You can try it once you find the perfect domain for you.

Expired Domain

Expired domain name is not actually option for those who are looking for domain name with fixed keywords and niche. First let me explain the whole structure for getting an expired domain name.

When a domain name registration period expires, it goes in Grace period of some fix days. This grace period varies for extensions and different registrars. During this grace period the old registrant can renew the domain without paying any extra amount. This period helps those registrants who forget somehow to renew. During this period the email and other features stop working. The domain will points to a webpage explaining the need for renewal.

After grace period, redemption period starts. During this period also, only the original registrant can renew their domain name. However, they have to pay extra money other than renewal charge.

If the original registrant do not apply for renewal even during the redemption period, after 5 days the domain name is open for fresh registration. If someone is looking for expired domain to buy, it will be achieved by registering it as fresh domain after this whole process is over. The normal time for this exercise is 75 days.

Now, it is possible to register an expired domain name after it has been deleted from the registry and open for fresh registration. However, if the demand for an expired domain is high. It will be hard to be the first to try for domain ownership just after it is again available for fresh registration.

One should use expert services like SnapNames or NameJet to snatch an expired domain just after its deletion. A domain name is deleted from the registry 5 days after the end of redemption period. Now, the deletion from the registry occurs somewhere between 11 AM to 2 PM Pacific Time. These services keep checking at regular interval through various registrars the status of deletion for the expired domain. This pinging process is done in such a way that they don’t get banned by the accredited registrars like VeriSign (for .com, .net and .name). These services are normally free. One may register at more than one place. As only one of these may catch the drop of domain names, so finally one have to pay only one of them. Once they catch the drop if no other party for the same domain name is there, the domain is yours, else it will be placed for auction. The min cost for these service will be around $ 70. If the name goes for auction it will be much costlier depending on the desperation of you and other probable buyers for the domain.

I found a very interesting thing here. If you could find any perfect domain name for you which has expired, I would suggest contact the current registrar directly and ask him to renew the domain and negotiate the terms for purchase of domain directly from him. One may say that the original registrant might have missed to renew the domain. Hence, if one contacts the buyer during grace period chances are he/she will renew it and don’t agree for selling the domain name. Or otherwise, the original registrant once learning there is a probable buyer for the domain may renew and ask for a higher price.

Now, as the domain name grace period for normal TLDs are 40 days and during this period all features of domain name are suspended. If the original registrant has missed to renew. He/she will renew within first 25-30 days. After that chances are heavy that the intention is not to renew the domain name. In the last 10-15 days try to contact the original registrant with a deal to renew the domain and sell it to you with an attractive price. Take my word this will cost you much lesser and without competition you will get the domain name. During the grace period benefit for original registrant will be more. One can negotiate and close the deal at as lower as $ 50 including transfer fees.

If the deal for renewal and sell by the original registrant is finalized during redemption period, then the cost to renew will be much higher. With addition of transfer cost and profit of original registrant the overall cost will be even higher, somewhere close to $ 100 to $ 125. One should look for this process only if he/she thinks the domain name will have more than one buyer after drop by registry. There are many aspects here. It is almost certain that original registrant thinks that the domain think that the domain name is not even worth renewal cost for him. So, even if he/she is offered double or triple the renewal cost. It is beneficial for them.

This under the table process will be good in nearly every aspect and not illegal.

As I have already mentioned in the first paragraph itself the expired domain is not for those who want the domain for some specific purpose with specific keywords for the domain. It is hard to find at any particular time a domain which is perfect for you and which has just expired. Domains are registered for a duration of one year to 10 years. Good domains are normally registered for longer duration to avoid renewal trouble every year. Hence, expired domains consists very few good and premium domains. These will in major way consist those domains which are of no use to their owners and they are making no money out of it and think they could not sell it to make some profit. But, if you could still search a domain perfect for you, it could be yours.

Deleted domains

Registering a deleted domain is just like registering a fresh domain. The benefits of registering a deleted domain is that you can get some domain names which might be an established websites with good amount of backlinks and listed in DMOZ. The domains available are those which don’t get any backorder after expiring. Hence, these domains don’t have much importance. However, as I’ve said that combination of two or three word domain names are hard to find as fresh domain. These types of domain names could be find in deleted domain names very easily. I’ve recently found a deleted domain name and purchased it at regular price of fresh domain which was much cheaper than its original worth. If you are seriously looking for a good domain name at cheap price, this is the best place to look.

Conclusion

The term “Perfect” for a domain name itself includes a lot of aspects to look. The points which are very important is how much the domain name costs and how much business one may gain or lose by going for a better or worst domain name. Buying a domain name at a price of $ 500 or $ 1,000 is not more if it is going to help you in making a brand image and earning thousands of dollars. What is best for someone should be decided by him/her only. Look at every aspect by every angle. Then, only you can decide which is the perfect domain name for you and what is its perfect price. Best of luck for your perfect domain name at the perfect price.

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