NASDAQ (U.S.): Acronym for the National Association of Security Dealers Automated Quotations. This is an organization that does exactly what its name stands for. The system provides a computerized information network through which brokers, banks, and other investment professionals can obtain up to the minute price quotations on securities traded over the counter. National Association of Securities Dealers Automated Quotations System: US stock exchange has a particular emphasis on development and technology companies. The NASDAQ Composite Index is an index covering all stocks in the NASDAQ market.
Naked Call: Where the writer of a call option (the “seller”) does not own the underlying security (this is also known as an “uncovered” position). This is a bearish position because the writer expects the stock price to fall. By not holding the underlying security, the writer is essentially exposed to an unlimited loss.
Naked Put: Where the writer of a put option (the “seller”) does not own the corresponding short position in the underlying security (this is also known as an ”uncovered” position). This is a bullish position because the writer expects the stock price to rise. By not holding the underlying security, the writer is essentially exposed to a loss equal to the value of the options’ strike price
Naked Call Writing: Selling a call option on shares the writer does not own. He expects the price to remain the same or fall so that if the option is exercised, he can buy it from the market. If however the price rises, he has to buy from the market, incurring a loss, covered call writing, on the other hand, is a safe exercise.
Naked Option: A call option for which the seller does not own the underlying shares, and which he hopes to buy from the market, believing that the price will fall. If it does, he makes a profit on the difference, it does not rises, the seller is caught in a naked position, and must sustain a loss by buying at the higher price.
Narrowing the Spread: The action taken by broker /dealer to narrow the spread between bids and offers by bidding higher or offering lower than the previous bid or offer. Also called closing the market.
Negotiated Dealing System (NDS): Electronic platform for facilitating dealing in Government Securities and Money Market Instruments, introduced by RBI.
Net Liquid Assets: Cash and readily marketable securities minus current liabilities of a company. This is the strictest test of a company’s ability to meet current debt obligations
Naked Position: One that is not hedged from market risk.
Negative Convexity: When a bond’s price rises less for a downward move in yield than its price declines for an equal upward move in yield.
Negative Cash Flow: When a company spends more than it earns in an accounting period, it has a negative cash flow.
Negative Yield Curve: Described as being negative (or inverted) when the yields on short-term bonds are higher than the yields on long-term bonds. This can imply that interest rates are expected to decline, or that there is excess demand for long-term bonds.
Nervous Market: The stock market which is reacting sharply to economic or political events, such as an annual budget unfavorable to industrial growth, drought, imposition or removal of price controls, change of government, etc.,
Net Domestic Product: Gross domestic product after deductions for the depreciation of a country’s capital goods.
Net Income: Company’s gross sales revenues minus taxes, interest, depreciation and other expenses.
Net Operating Income: Gross sales revenue minus operating expenses. There is no deduction for taxes or interest
Net Position: Where a fund can short sell securities, the net position refers to the level of a fund’s exposure to market risk. For a long/short equity fund, if a fund is 100% long and 30% short, then the net position is 70% (also known as net exposure). Traditional investment funds are 100% long.
Net Present Value (NPV): Present value of expected future cash flows minus any initial and ongoing investment costs. Often used in capital budgeting to determine whether or not to make an investment (if negative, the investment should not be made).
New York Stock Exchange (NYSE): Largest stock exchange in the US.
Nikkei: Tokyo Stock Exchange’s headline index. It covers only a relatively small number of stocks (225).
Net Worth: The aggregate value of the paid-up equity capital and free reserves (excluding reserves created out of revaluation), reduced by the aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous expenses not written off.
New Issue: Shares of a company offered to the public, through a public issue, for the first time to be listed on the Stock Exchange.
Net Asset Value (NAV): The current market worth of a mutual fund’s share. A fund’s net asset value is calculated by taking the fund’s total assets, securities, cash, and any accrued earnings, deducting liabilities, and dividing the remainder by the number of units outstanding.
National Income: Annual income earned by a country for its production of goods and services.
Nifty: A select group of fifty shares of the National Stock Exchange of India. This constitutes the NSE-Nifty Index shortly Nifty50.
Nominal Interest Rate: Interest rate in monetary terms, unadjusted for inflation.
Nominee: Person or company that is registered as the owner of a security. The assets of segregated pension plans are usually held in nominee accounts which, for convenience, are registered in the name of the investment management company. However, the pension plan remains the beneficial owner of the securities.
Noise Trading: People who trade on noise are willing to trade even though from an objective point of view they would be better off by not trading. Perhaps they think the noise they are trading on is information or perhaps they just like to trade.
Non Diversifiable Risk: Risk inherent in a particular market. Owning a greater number of securities from that market will not reduce (diversify away) this risk. Also known as systematic risk.
Non Systematic Risk: Risk attributable to an individual company, pertaining to factors not associated with the sector or broader market. The impact of non-systematic risk factors can be reduced by the diversification of a portfolio
Non Deliverable Swap: Similar to a non-deliverable forward, the only difference is that settlement for both parties is done through a major currency.
Non-Discriminatory Poison Pill: Anti-takeover defense plans which do not penalize acquirers exceeding a given shareholding limit. Include flip-over plans, preferred stock plans, and ownership flip-in plans which permit cash offers for all shares.
No-load Fund: A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/ scheme at net asset value (NAV) and no additional charges are payable on the purchase or sale of units.
Normal Distribution: The most common type of distribution for a variable whereby the probability distribution plots all of its values in a symmetrical fashion and most of the results are situated around the probability’s mean. Often associated with the term bell curve, this terminology is an extension of the fact that the graph used to depict a normal distribution consists of a bell-shaped line.
Normal Yield Curve: Described as being normal when the yields on short-term debt are lower than the yields on long-term debt. Also known as a positive yield curve.
Note: Short-term debt instrument, usually with a maturity of five years or less.
Notional Amount: Notional amount for a derivative contract is the quantity/value of the underlying securities to which the contract applies.Stock Market Reference (A-Z)