Hello these are the very important terms that we usually hear in connection with the share market.


1) Bid- A bid price is the highest price that a buyer (i.e., bidder) is willing to pay for a thing. It can be a company, share or something like that.


2) Block trade- Block trading is actually a large amount of securities being traded, typically at least 10000 shares or something like that.


3) Blue chip stock- A blue chip stock is the stock of a well-established company having stable earnings good management strategies and no extensive liabilities.


4) Buyback-  Buyback is reverse of issue of shares by a company where it offers to take back its shares owned by the investors at a specified price.


5) Circuit breaker- Circuit Breaker is a system to sustain sanity of the stock market. For example In the third week of January 2008 the BSE SENSEX index went into a free fall. The index hit the lower circuit breaker in barely a minute after the markets opened at 10 AM. Trading was suspended for an hour. 


6) Defensive Stock- A stock that tends to remain stable under difficult economic conditions. 


7) Earnings Per Share (EPS)- Total earnings divided by the number of shares. For example let the share price of a company say 'A' be Rs. 20 and the EPS of A be Rs. 12. It means that the company 'A' makes a profit of Rs.12 annually by using 20 rupees that is invested by an investor.


8) Face Value- Face Value of a share is the value which is decided by the company issuing it, at the time of initial offering 


9) PE (Price Earning Ratio)- The most common measure of how expensive a stock is. The P/E ratio is equal to a stocks market capitalization divided by its Net Income over a 12-month (4 Quarters) period.


10) Penny stocks-  stock that trades at a relatively low price and market capitalization.


11) Speculation- Stock market speculation, by definition, involves taking a position that will benefit from a certain outcome. Speculators doesn't care about the inherent value of the stock. when investors become speculators they are purchasing a stock with the sole purpose of selling it to someone else at a higher price.