These are 10 terms that investors in the capital market must know

These are 10 terms that investors in the capital market must know about Dunia Arsitek Illustration - Image: Canva

Are you new to the world of capital markets? Like entering the "new gang," you as an investor also need to know the terms in the capital market so that it is up to date.

In the capital market or stock exchange, there are a number of terms that are important for investors to know. The reason is, every term in the stock exchange will relate to the development and condition of a stock.

Terms in Capital Market

Then, what are the terms in the capital market?

These are 10 terms that investors in the capital market must know about Dunia Arsitek Illustration - Image: Canva

1. Auto Rejection (ARA & ARB)

The Indonesia Stock Exchange (IDX) has a JATS (Jakarta Automated Trading System) alias trading system that is carried out automatically.

So if there is a stock transaction that exceeds the price limit set by the exchange, JATS will auto-reject automatically: ARA (Upper Auto Reject) and ARB (Lower Auto Reject).

ARA is done so that a stock does not rise too much and provides a fair share transaction for investors. Likewise with ARB, it is done so that the price of a stock does not continue to fall.

2. Bearish and Bullish

Remember, stock movements are unstable. Sometimes up, sometimes down.

If in the capital market, when the movement of stock prices or indexes generally decreases, the movement is known as bearish.

Meanwhile, if an index or stock is experiencing a significant increase, then the movement is called bullish.

3. Capital Gain and Capital Loss

When you invest in stocks, there are two possibilities: profit or loss. The profit you get is called a capital gain.

Meanwhile, if you experience a loss because the selling price of the stock is lower than the purchase price, then it is called a capital loss.

These are 10 terms that investors in the capital market must know about Dunia Arsitek Illustration - Image: Canva

4. Buyback

Often hear the term buyback?

In short, stock buybacks are buybacks of shares that have been outstanding in the public. This buyback is carried out by the issuer that issued the shares.

5. Dividend & Cum Date

Usually, investors are really waiting for the dividend distribution moment. For those of you who don't know, dividends are the distribution of profits/profits of issuers determined at the General Meeting of Shareholders (GMS).

Dividends can also be distributed in cash or in the form of shares to investors. Oh yes, there is also the term cum date, which is the last date for an investor to collect shares that will distribute dividends.

6. Cut Loss & Take Profit

When the price of the stock you collect decreases, you can sell it with the assumption that the action you take is to avoid greater losses. This action is known as cut loss.

On the other hand, when the stock you collect increases and you want to take profit at the same time, the action you take is known as take profit or TP.

7. Rights Issue

An issuer can take a preemptive right (HMETD) action or known as a Rights Issue.

This Rights Issue is a scheme to raise funds for issuers in the capital market by issuing new shares and giving shareholders the opportunity to exercise their rights.

These are 10 terms that investors in the capital market must know about Dunia Arsitek Illustration - Image: Canva

8. Stock Split

There are times when a stock has reached a high enough price. Well, at that time, an issuer could take corporate action by splitting stock prices in a certain ratio, or what is known as a stock split.

That way, the number of shares outstanding will increase and make the share price cheaper. So, it can attract investors and the stock transactions become crowded.

9. Suspend

A stock can also be suspended or suspended from the stock exchange, you know! If the shares are suspended, automatically the shares cannot be traded for a while.

There are several factors that can cause a stock to be suspended from the stock exchange. Starting from sanctions for not providing financial reports, to stock prices that are considered unreasonable because they rise or fall significantly.

10. EPS

EPS is earnings per share, aka earnings per share. EPS is important in calculating the price to earnings ratio (PER), which is often used as an indicator to determine the low or high price of a stock. EPS is also used for fundamental analysis of a stock.

What other terms do you know in the world of capital markets?



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