An investment’s total return over the course of a year, which includes dividends or interest and capital gains or losses, but excludes commissions, other transaction costs and taxes. Average annual return is the arithmetic mean of multiple annual returns. Compound annual return is the annual rate at which an investment would need to compound to reach a cumulative figure.
An investment strategy that involves spreading assets among different types of securities such as stocks, bonds and money market instruments.
Any program an investor sets up to allow the automatic accumulation or withdrawal of money through the regular purchase or sale of shares or units.
An appropriately weighted and adjusted arithmetic mean of specific securities, an average is designed to represent general trends or behavior of a complete market or individual segments of a market.
Also called a fixed-income security, a bond is an interest-bearing security that requires the issuer (borrower) to pay the bondholder (lender) a specified sum of money, usually at specific intervals, and to repay the principal amount at maturity. Bonds play an important role in your investment portfolio, as they provide a steady income and preserves your principal . Barita Investments Limited offers a diversified selection of Government of Jamaica (GOJ) and Bank of Jamaica (BOJ) securities.
The level of a company’s sales at which sales match costs and neither a profit nor a loss is made. Or a level in the market at which an existing holding will make neither a loss nor a gain.
The difference between the price you paid for an asset and the price you sold it for, if you sold it for a profit.
Short-term debt obligations that have maturities of less than a year and are issued by banks, corporations and other borrowers. Although they are considered unsecured debt, they offer the relative safety of an instrument that is issued only by top rated concerns and is nearly always backed by bank lines of credit.
In addition to retaining the cancelled certificates and instructions presented for transfer, the transfer agent is responsible for maintaining a current record of all the owners of the company’s securities. When they are performing this additional role, they are acting in the capacity of company registrars.
A composite index measures all common stocks listed on a given Exchange and any subgroup indices – that are a part of this index. The index tracks the change in market value of the exchange’s common stocks, adjusted to eliminate the effects of new listings and de-listings. The market value of each stock is calculated by multiplying its price per share by the number of shares listed. The composite index is a fairly good indicator of general market strength.
The effect of reinvesting an investment’s earnings.
The Consumer Price Index (CPI) is considered the most widely used measure of inflation and is regarded as an indicator of the effectiveness of government policy.
The CPI is a basket of consumer goods (and services) tracked from month to month (excluding taxes). It is one of the most followed economic indicators and considered to be a big market mover. A rising CPI indicates inflation; a large increase is something financial markets don’t like to hear. Inflation is the rate at which the general price for goods and services is rising, and subsequently our purchasing power is falling. As inflation rises this means that every dollar you own will buy a smaller percentage of a good or service.
Debt instruments issued by private corporations to raise capital. A bond is issued at a par value of $1,000 with a set maturity date and is then traded on the secondary market.
This is a country’s total debt obligations expressed as a percentage of its Gross Domestic Product (GDP). It measures how much of each dollar earned goes toward paying off the national debt.
This is another debt instrument issued by the GOJ. Interest rates are either Fixed or Variable. Debentures are purchased at face value and interest is usually paid semi-annually or quarterly. The minimum purchase accepted at Barita is J$100,000.
The strategy of spreading investment risk by placing assets in different types of securities. You can also diversify by industry, geographic region, capitalization size and investing style.
A dividend is the distribution of a part of a company’s earnings to its shareholders.
A stock’s dividend yield is its annual dividends per share divided by price per share. The dividend yield plus capital gains percentage equals total return. The dividend yield is an indication of the income generated by a share of stock.
The strategy of investing a set amount of money on a regular basis, such as monthly or quarterly. By dollar cost averaging, your investment dollars buy fewer shares when prices rise and more shares when prices decline. This can lower the average cost per share, but does not assure a profit or protect against loss in a market decline. Such a plan involves continuous investment in securities regardless of fluctuating price levels of such securities. An investor should consider his/her financial ability to continue his/her purchases through periods of low price levels.
EPS = Earnings / Number of Shares in Issue
EPS is a key ratio used in share valuations. It shows how much of the company’s profits, after tax, each shareholder owns.
Eurobonds are bonds issued and traded outside of the issuing country. These instruments are book value only, and are sold by our Central bank to the overseas market. Denominations are in USD and EURO Dollars. Currently, terms are from 2-years to 30-years. Interest is paid half-yearly or annually. Purchases can be made on your behalf through our overseas brokers. The minimum investment accepted by us is US$10,000.00.
Fixed-income securities offer a relatively safe and predictable income flow. The amount of interest the issuer has agreed to pay is set at issuance and remains “fixed” until maturity. While fixed-income securities generally do not offer the potential high returns of other investments, the investor is usually spared most of the volatility common in other markets.
There are a number of fixed-income vehicles available, each one offering a range of credit ratings and maturities. Fixed-income securities provide the flexibility and liquidity needed to structure a portfolio tailored to the investor’s specific investment objectives. Fixed-income securities include bonds, debentures, money market instruments and even preferred shares,ro reflecting widely different borrowing needs as well as investor demands.
Gross domestic product is the monetary value of all the goods and services produced by an economy over a specified period. It includes consumption, government purchases, investments, and exports minus imports.
This is perhaps the greatest indicator of the economic health of a country. It is usually measured yearly, although monthly statistics are also released. The nominal GDP (GDP Nominal) is unadjusted for inflation, and it gives a less realistic picture of a country’s economic health, than the real GDP, which is adjusted for inflation.
This is the total GDP divided by the number of people in the population. It is used as a measure of the average wealth of the nation and is useful for comparing the wealth of different countries, regardless of their population size.
To convert share certificates of stocks from paper form to electronic registered from by depositing them on an electronic securities depositary such as the Jamaica Central Securities Depository (JCSD). This is a requirement to be able to trade shares on the Jamaica Stock Exchange (JSE).
Issued shares refer to the number of shares that are currently owned by investors. This includes restricted shares (shares owned by the company’s officers and insiders) and shares held by the public. Shares that the company has repurchased are not considered outstanding stock.
This number is more important than the authorized shares or float because it is used in the calculation of many metrics including market capitalization and earnings per share (EPS).These shares are also known as “outstanding shares” or “issued and outstanding”.
JCSD is the acronym for the Jamaica Central Securities Depositary.
JSE is the acronym for the Jamaica Stock Exchange.
The last price refers to the last price at which a security traded at the most recent trading session.
The ease with which you can redeem an investment for cash or reinvestment.
Local Registered Stocks are medium to long-term government obligations. They are usually sold at face value and interest payments may be fixed or variable. The minimum bid accepted at Barita is J$100,000.
The amount an investor deposits with a broker when borrowing from the broker to buy securities. Margins usually range from 50% to 80% of the security’s price.
Market Capitalization is the total dollar value of all outstanding shares. It is calculated by multiplying the number of shares times the current market price. It is sometimes called market cap and is a measure of a company’s size.
A mutual fund that invests in highly liquid, short-term corporate and government issues, such as commercial paper, bankers acceptances, securities and certificates of deposit. Although money market mutual funds are not government insured, their primary investment goal is preservation of principal through short-term instruments, making them very low risk investments.
A debt obligation of a state or local government entity. The funds may support general governmental needs or special projects. Most municipal bonds qualify as “public purpose bonds” which can make them exempt from federal, state and/or city taxes depending on the type of bond.
A fund operated by an investment company that pools the money of shareholders and invests in a portfolio of securities. These funds offer investors the advantages of professional management, diversification and liquidity. A management fee is charged for these services.
The market value of one mutual fund share. It is calculated by taking the value of the fund’s holdings and dividing it by the number of shares outstanding.
Net income is the company’s total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Net income is often referred to as “the bottom line” of a company.
The right, or option, to buy or sell a specific investment at a set price within a specified time period. If the right to buy or sell is not exercised by the specified period, the option expires and the option buyer forfeits the money. (Note: Not suitable for all investors.)
Any shares that are not preferred shares and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company and entitles the owner to a vote in matters put before shareholders in proportion to their percentage ownership in the company.
A collection of investments, such as stocks, bonds and mutual funds.
A class of ownership in a corporation that has a higher claim on the assets and earnings than ordinary shares. Preference shares generally have a dividend that must be paid out before dividends to ordinary shareholders and the shares usually do not have voting rights.
P/E = current share price of a company divided by its earnings per share.
A company’s P/E (also known as its multiple) shows how high its shares are priced in relation to its historical earnings. Although mathematically, it relates share price to past performance, the reality is that P/Es are more about forward expectations than the past.
The amount of money you invest, excluding capital gains and reinvested dividends.
A legal document that represents a formal, written offer to sell a security. In the case of a mutual fund, the prospectus details the fund’s investment policies and key financial data.
A “Repo” agreement is a contract involving the sale of securities to the client (lender) from the borrower where the borrower commits to repurchase the securities on a specified date at a specified rate of interest. Barita Investments Limited offers Repurchase agreements with terms ranging from 30 days to 365 days as well as call investments at very competitive rates. The minimum investment accepted by us is J$50,000.00.
Represents the percentage of gain or loss on an investment.
Revenue means the dollar amount of annual sales, including discounts and returned merchandise. It is the “top line” figure from which costs are subtracted to determine net income. When evaluating stocks, revenue growth is often an indication of how healthy a company is.
The chance that the value of an investment could decline in the marketplace.
Reinvesting proceeds from a security that has matured into a new issue of the same or similar terms.
Stocks, bonds and other instruments that represent ownership interests in companies or obligations to investors.
Share volume refers to the number of shares or contracts traded in a security or an entire market during a given period.
Also called an equity security, a stock is issued by a public company and represents ownership in that company. Shareholders of common stock can vote on the company’s major decisions and receive dividends as their share of profits. As a company’s stock price rises or falls, so does the shareholder’s investment.
Representing the most complete measure of investment performance, it includes an investment’s capital appreciation or depreciation as well as dividends or interest paid, after a fund’s expenses have been deducted.
The trading frequency measures the trading activity on a particular security during a given period. Typically it gives a measure of how easily an asset can be converted to cash in the market. If there is a large number of buyers and sellers and trading activity, it will provide high liquidity for this stock. For example, a trading frequency of 95% suggests that over the time period under review, the stock traded in 95% of the trading sessions.
The primary function of the transfer agent is to control the issuance and cancellation of certificates of a particular corporation. This is done by using blank certificates designed by the company, which are maintained and controlled on the agent’s premises.
The general rule for transferring stock certificates out of a holder’s name is: the certificate must be endorsed on the legal instruction form provided (called the transfer form) exactly as the owner’s name appear on the face of the certificate. In cases where it is not possible for the registered owner(s) to perform this function, documentation must be provided by the owner of the certificate, which could authorize the acceptance of a signature by both the stockbroker and the transfer agent.
A transferor is the owner of the stock who is transferring his/her ownership of the securities. This might be because the person wishes to sell the securities or it might be in satisfaction of legal requirements such as in the case of estates.
Treasury Bills are short-term Government obligations. They are sold by BOJ through an auction system with competitive and non-competitive bidders. The bid with the highest price gets allotted first. Treasury bills do not pay interest; instead, they are sold at a discount (below par) and mature at 100 (par). The difference between the purchase price and par at maturity represents the return to the investor.
Treasury bills are issued in a variety of maturities and denominations to meet the needs of varying groups of investors seeking income and liquidity in a single investment. Maturities range from 90 days to 365 days. The minimum bid accepted by us is J$50,000.00.
A fiduciary relationship in which a person, called a trustee, holds title to property for the benefit of another person, called a beneficiary. An agreement is drawn up to establish the trust, set out the provisions and delineate the powers of the trustee.
US$ Index Bonds are purchased using Jamaican Dollars.* Principal and interest may be paid either in Jamaican or United States Dollars. At the time of purchase, the US$ value is noted, using the average of the last ten-day exchange rate for conversion. Upon maturity, the last ten-day average exchange rate is used for conversion, hence hedging against devaluation. The Minimum purchase is the Jamaican dollar equivalent of US$1,000.
The interest or dividend payable on a security, expressed as a percentage of the security’s price.