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Finance GlossaryLeverage In Stock Market
Leverage In Stock Market
Definition of Leverage In Stock Market
Leverage is a loan that a broker offers to allow traders to take up bigger positions by paying lesser capital. This feature is known as Margin Trading Facility (MTF) or simply margin funding. Leverage is often represented as a multiple like 2X, 3X, 4X, 5X and so on. For example, getting 5X leverage on a trade worth ₹1,00,000 means you’ll pay ₹20,000 and the broker will cover the rest of the ₹80,000.
Related Terms
Equity Share Capital
The total amount of money that is raised by a company through the issuance of shares is known as equity share capital. Shares issued could be classified as common or preferred shares, both of which are a part of the equity share capital.
In general, share capital is known to be the money raised by issuing shares. Companies have the option of raising more equity share capital by issuing additional shares through a Follow on Public Offer (FPO) or other financing methods.
In general, share capital is known to be the money raised by issuing shares. Companies have the option of raising more equity share capital by issuing additional shares through a Follow on Public Offer (FPO) or other financing methods.
Block Trade
A block trade is a substantially large buy or sell order for a stock, commodity, or other security. Block trades are typically done by institutional investors like hedge funds, mutual funds, and others to mask the true size of the transaction.
Shares change hands between companies after the price of the security is privately negotiated. Most block trades are routed through investment banks and executed outside the conventional market.
Shares change hands between companies after the price of the security is privately negotiated. Most block trades are routed through investment banks and executed outside the conventional market.
Gross Domestic Product
The Gross Domestic Product is an economic measure of the financial value of all goods and services produced by a country during a specific time period.
Discount Brokers
Discount brokers are platforms that offer essential stock trading and investment services rather than a full stack of services that may or may not be useful for everyone.
Discount brokers are discount brokers because their service is priced competitively, meaning the cost of trading and investing may be significantly low than a fullservice broker.
Discount brokers are discount brokers because their service is priced competitively, meaning the cost of trading and investing may be significantly low than a fullservice broker.
Overcapitalized
A company is said to be overcapitalised if it has issued more debt and equity than is financially prudent or necessary, resulting in an inefficient capital structure. This means that the company is carrying an excessively large amount of capital (whether in the form of high paid-up capital, retained earnings, or borrowings) compared to its actual needs or its ability to generate proportionate profits.
Grey Market
The grey market is an unofficial yet legal marketplace where unlisted or soon-to-be-listed securities are traded.
By definition, the grey market is an over-the-counter market because of the lack of regulation and structure.
Underwriters of an IPO gauge market demand for a share by analyzing the grey market premium for it before going public.
By definition, the grey market is an over-the-counter market because of the lack of regulation and structure.
Underwriters of an IPO gauge market demand for a share by analyzing the grey market premium for it before going public.
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