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Indian Market, Regulation & Taxation

Annual Information Statement

A consolidated statement from the income tax department showing financial transactions reported against a taxpayer's PAN.

Test: the transaction was reported to the tax department by a bank, broker, depository, fund house or registrar against the taxpayer's PAN qualitative Corporate Actions, Dividends & Governance

Annual Report

A company's yearly publication containing its audited financial statements, directors' report and governance disclosures.

Test: the document contains the audited accounts, board report, management discussion and analysis, and the corporate governance report qualitative Derivatives, Futures & Options

Arbitrage

Simultaneously buying and selling equivalent assets in different markets to lock in a price difference without directional risk.

Test: the combined position has offsetting exposures, so the profit is fixed at inception regardless of the underlying's movement ₹ Funds, ETFs & Index Investing

Arbitrage Fund

An equity-taxed fund that holds offsetting cash and futures positions, earning the basis rather than market returns.

Test: every cash market holding is fully hedged by a short futures position in the same security qualitative Indicators & Oscillators

Aroon Indicator

A pair of lines measuring how recently the highest high and lowest low occurred within a lookback window.

Aroon Up = ((n - periods since n-period High) / n) x 100; Aroon Down = ((n - periods since n-period Low) / n) x 100 % Indian Market, Regulation & Taxation

ASBA

Application Supported by Blocked Amount: the mechanism by which IPO application money is blocked in the applicant's bank account rather…

Test: the application amount is blocked in the investor's own bank account and debited only to the extent of shares actually allotted qualitative Technical Analysis & Chart Patterns

Ascending Triangle

A formation with a flat upper boundary and a rising lower boundary, so the range narrows upward toward a point.

Test: two or more highs at approximately the same level, with successively higher lows converging on them qualitative Orders, Execution & Market Structure

Ask Price

The lowest price a seller in the order book is currently willing to accept for a security.

Best Ask = lowest sell limit price resting in the order book ₹ Risk & Portfolio Management

Asset Allocation

The division of a portfolio between asset classes such as equity, debt, gold and cash.

Test: target weights are set per asset class and the portfolio is managed to those weights over time % Funds, ETFs & Index Investing

Asset Management Company

The SEBI-registered entity that manages a mutual fund's schemes and is paid a fee for doing so.

Test: the entity holds a SEBI registration to manage mutual fund schemes on behalf of a trust, and is compensated within the expense ratio qualitative Fundamental Analysis & Valuation

Asset Turnover Ratio

Revenue divided by total assets, measuring how much sales the asset base generates.

Asset Turnover = Revenue / Average Total Assets ratio (x, times) Funds, ETFs & Index Investing

Assets Under Management

The total market value of the investments a fund or manager oversees.

AUM = Number of Units Outstanding x Net Asset Value per Unit ₹ crore Corporate Actions, Dividends & Governance

Associate Company

A company in which another holds significant influence but not control, typically 20% or more of voting power.

Test: the investor holds at least 20% of voting power or has significant influence without control; accounted for by the equity method qualitative Derivatives, Futures & Options

At the Money

An option whose strike is at or nearest to the current price of the underlying.

Test: Strike is equal to, or the listed strike closest to, the current Spot price qualitative Bonds & Fixed Income

AT1 Bond

An Additional Tier 1 bond: a perpetual, subordinated bank instrument that can be written down or converted to equity to absorb losses.

Test: perpetual, subordinated, with discretionary coupons and a contractual write-down or conversion trigger on a capital shortfall qualitative Orders, Execution & Market Structure

Auction Settlement

The exchange process that buys shares in a special auction when a seller fails to deliver them on the settlement date.

Cost to the defaulting seller = Auction Price - Original Sale Price, plus penalties, with the auction price capped at a stated band ₹ Corporate Actions, Dividends & Governance

Audit Committee

A board committee, composed mainly of independent directors, that oversees financial reporting, internal controls and the auditors.

Test: the committee has a majority of independent directors, an independent chair, and members with financial literacy qualitative Financial Statements & Accounting

Auditor's Report

The statutory auditor's formal opinion on whether the financial statements give a true and fair view in accordance with the applicable…

Test: the report states an unmodified, qualified, adverse or disclaimer opinion, together with any key audit matters and emphasis of matter qualitative Funds, ETFs & Index Investing

Authorised Participant

An institution permitted to create and redeem ETF units directly with the fund, keeping the market price aligned with value.

Test: the entity has an agreement with the fund permitting creation and redemption in creation-unit blocks qualitative Market Psychology & Behavioural Finance

Authority Bias

Assigning greater weight to an opinion because of who expressed it rather than because of its evidence.

Test: the persuasiveness of a claim rises with the speaker's status, independent of the reasoning offered qualitative Orders, Execution & Market Structure

Auto Square-Off

The broker's automatic closing of an intraday or margin-deficient position when a cut-off time or a risk threshold is reached.

Test: the broker's risk system closes the position without client instruction, on time or on a margin shortfall qualitative Market Psychology & Behavioural Finance

Availability Bias

The tendency to judge probability by how easily examples come to mind rather than by actual frequency.

Test: perceived likelihood tracks the vividness and recency of remembered examples rather than base rates qualitative Indicators & Oscillators

Average Directional Index

An indicator measuring the strength of a directional move on a scale of 0 to 100, without indicating its direction.

ADX = smoothed average of |+DI - -DI| / (+DI + -DI) x 100 ratio (x, times) Indicators & Oscillators

Average True Range

The average of the true range over n periods, measuring how much a security typically moves in a period.

True Range = the greatest of (High - Low), |High - Previous Close| and |Low - Previous Close|; ATR = smoothed average of True Range over n periods ₹