Glossary
Backwardation
Where futures market prices are progressively lower in the future delivery months than in the nearest delivery month. For instance, if the wool quotation for March is 480/kg and that for July is 450/kg then the backwardation for five months against March is 30/kg. Opposite of contango.
Balanced fund
A fund that invests across a mix of asset classes like cash, fixed interest investments, property and shares.
Bank bill swap rate (BBSW)
The central benchmark interest rate in Australian financial markets at which banks will lend to each other (via bank bills) for periods of 6 months or less.
Bankruptcy
An insolvency procedure that applies to a natural person, not to a company
Barriers/barrier level
Defined level that causes some event to occur in relation to a warrant. The disclosure document will provide details.
Basis point
One per cent of one per cent (0.01%).
Basis risk
Risk that movements in the price of an asset do not correlate exactly with movements in the price of the underlying financial instrument or commodity.
Bear market
When prices are falling and further falls are expected.
Bearish
View that prices will fall.
Benchmark
Yardstick that a fund manager compares the performance of their fund to, such as the All Ordinaries Index which may be used as a benchmark for Australian shares.
Beneficiary
Someone who will receive a benefit or asset in the event of the owner's death. Beneficiaries of a super fund are the members, and their dependants (if the member dies).
Beta
Measure of how changes in a share price correlate to overall movements in the share market as a whole.
Bid
Price at which someone is prepared to buy shares Opposite to offer.
Bid-ask spread
The difference between the bid price and the ask price for shares or other assets is called the spread. You cross the spread when making an offer to buy at the ask price, which is higher than other buyers have bid. You can also cross the spread when selling at the bid price, which is lower than what other sellers have asked.
Binding death benefit nomination
Where the superannuation fund, in the event of your death, must pay your superannuation benefit to your nominated beneficiary, unless it would be unlawful to do so.
Block trade
Off-market trading mechanism enabling market users to arrange and transact orders of significant size in specified contracts.
Blue chip
Larger companies with a long history of profitability and stability.
Blue chip share
A share in a well-established company with a record of stable earnings over a long period, typically a market leader or among the top companies in its sector.
Board of directors
Elected body or persons formed to control the planning and implementation of corporate objectives.
Bond
A tradeable debt security, usually issued by a government or semi-government body to raise money. Holders of the bond have lent money for which they receive a fixed rate of interest over a set period of time. The bond is repaid with interest on the predetermined maturity date. Bonds can be traded on the sharemarket.
Bonus dividend
An extra dividend in addition to the normal dividend. See bonus share/bonus issue.
Bonus share plan
Usually a plan whereby shareholders may elect to receive all or a portion of the dividend in shares instead of cash.
Bonus share, bonus issue
Additional shares issued by the company to existing shareholders for free, usually in a pre-determined ratio to the number of shares already held.
Books close date
Date at which a company's share-register is closed off to identify the shareholders and to calculate any entitlement to new issues and dividends.
Borrowing costs
Interest and other costs incurred by an entity in connection with the borrowing of funds.
bottom-up approach
ATO term - A detailed examination of specific data sources (typically individual tax returns through audit or review) to determine the extent of non-compliance across the whole population. Data sources can range from tax returns, audit data, risk registers or data matching. It includes random enquiries, operational data, statistical approaches and model-based methods. These methods are typically used for direct taxes.
Break
Sharp decline or a sharp rise in price, usually after a sustained period of little or no movement.
Break fee
You may be charged a 'break' fee if you break your fixed rate mortgage.
Bridging finance
Short-term finance that covers the period between buying a new property and selling your existing property.
Broker
Trader or trading company given responsibility for the acceptance and/or execution of an order.
Brokerage
Fee paid to a stockbroking firm for buying or selling of shares.
BSB
A number that identifies a specific branch of a bank or other financial institution within Australia. The BSB number plus an account number identifies a particular account.
Building society
Community-based financial institution usually owned by its members that offers traditional banking services like savings accounts and loans, listed on the APRA website as a building society. Also called a mutual building society. See also credit union
Bull market
When prices generally are rising and further rises are expected.
Bullish
View that prices will rise.
business activity statement (BAS)
ATO term - The form lodged by businesses on a monthly, quarterly or annual basis to report certain tax obligations, including pay as you go (PAYG), fringe benefits tax (FBT), luxury car tax (LCT), wine equalisation tax (WET), and goods and services tax (GST).
Business cycle
Also known as the economic cycle. The rise and fall of the economy, from a peak, or boom, to a trough and back to a peak.
Business day
Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.
Business rules
The ASX Market Rules govern the operations and behaviour of Market Participants of ASX and Affiliates. The Market Rules set out the requirements to become a Market Participant (commonly referred to as 'stockbroking organisations') and an Affiliate. The ASX Settlement Operating Rules govern the operation of CHESS, the electronic transfer and settlement system, and the CHESS sub-register.
Buy and write
Strategy requiring the simultaneous purchase of underlying securities and the writing of call options over those securities representing the same number of those securities.
Buy back
Offsetting purchase to "cover" or liquidate a short sale. Also refers to when a company repurchases existing shares to reduce the number of shares on issue.
Buy on open
To buy at the beginning of a trading session at a price within the opening price range.
Buyer advocate
Is a person or organisation paid a fee to work on behalf of a buyer to evaluate and negotiate a property purchase.
