Stock Market Terms By Letter: M


Market Older: An order to buy or sell at the market price as soon as the order reaches the exchange’s trading floor. See At Market.

Margin: A term generally used in the field of investment to describe a type of stock trading system. A system whereby a client first places an initial cash deposit with the broker to pay a part of his intending purchase or as part security for a short sale. He will then borrow the rest of the purchase or sales cost from the broker. The amount which he borrows from the broker is known as the Margin Debt or simply the Margin. The amount he can borrow is a fixed percentage of the market value of the security (normally 50 per cent). In the event of a fall in the price of the stock such that 50 per cent of the market value of the stock is smaller than the amount of margin debt outstanding, the broker can ask the client for additional injections of funds to cover the shortfall. This is known as a Margin Call.

Market Capitalisation: The total market value of a listed company. It is computed by multiplying the per share market price by the number of shares outstanding.

Market Portfolio: Refers to a type of investment portfolio in which the proportion of the shares held in each of the listed companies is in proportion to the Market Capitalisation of each of the firms in the market.

Marriage Deal: Sometimes referred to as Crossing. A stock transaction wherein the same broker is acting for both the buyer and the seller.

Merger: This occurs when two or more companies agree to join their organisations.

Mid-range Price: The average price between the High and the Low.

Minority Interest: This item arises when Consolidated Balance Sheets and Profit and Loss. Accounts are prepared. The Consolidated accounts of a group of companies include all the Earnings and Assets of the Subsidiaries within the figures of the parent company. Since it is possible for minority shareholders to have partial ownership of the Subsidiaries so included, their Interest must be separately shown in order not to give a false picture of the total earnings and asset of the group. See Interest.

Modern Portfolio Theory (MPT): A theory which explains the co-movement of different stocks within the same stock market. This theory is the basis of the concept of diversification to reduce the uncertainty in investment.

Mutual Fund: US term for Unit Trust.