The financial world has developed a special investment-oriented language to help describe the stock market, investments, securities for the stock market, stock market analysis, and its conditions. At times you may be confronted with a term which is totally alien or has a completely different meaning from what you thought. Misunderstanding these terms can sometimes lead to the wrong conclusion, and that can cost you money!

What you don't know can hurt you.

When an investor buys or sells less than the tradable lot of a scrip (e.g.tradable lot at the KSE for PIA is 500 shares) at the Karachi Stock Exchange, he or she is said to be trading an odd lot. Traditionally, odd lots involve higher proportional transaction costs than round lots. Some investors look to the ratio of odd-lot buying versus odd-lot selling to see what very small investors are doing, and then do the opposite. Odd lot theory, as it is known, is based on the idea that small investors usually are wrong.

The price paid in a security's first transaction of the current trading day.

The number of contracts outstanding for a given option or commodities future. Open interest is a measure in literally how much interest there is in a particular option or future, and is reported in the financial press.

A fund that is open to new investors where both new investors and existing shareholders may purchase as many shares as they want. Most mutual funds are open-ended. The fund grows as more money comes in. When investors sell, the number of outstanding shares drops. Occasionally, open-end funds are closed to new investors when they become too large and difficult to manage. However, current shareholders in the fund can continue to invest money. Conversely, a closed-end fund raises money only once, offers a fixed number of shares, and these shares are traded on exchanges much like stocks.

Includes any adjustments that involve the actual operations of the company. These items actually affect the income of the company.

A company's ongoing operations, not counting cash derived from asset-sales or other extraordinary items.

A firm's earnings from normal operations, minus the everyday costs of doing business. Thus, operating income doesn't take account of proceeds from an asset sale; these nonrecurring items are excluded. On the other hand, costs such as interest expenses and taxes are also ignored. Operating income gives investors an idea of how much money a company makes from its business operations.

The ratio of operating costs to sales, or the inverse of the profit margin.

The cost of passing up one investment in favor of another. For example, if you take your money out of a money market fund that is paying 6 percent to invest in a promising stock that yields only 4 percent, the opportunity cost while you're waiting for the stock to go up in value is 2 percent.

The chance you take when you tie your money up in a so-so investment like a bank certificate of deposit and lose the chance to put it into something with real growth potential.

Options are contracts giving the holder the right to buy or sell a stock at a given price by a given date. An option giving you the right to buy at an agreed price is known as a call. The opposite is called a put, and gives you the right to sell. Options always have a specified life, usually three, six or nine months. Options can be a fairly speculative instrument.

Includes prepayments, deferred charges, and amounts (other than trade accounts) due from parents and subsidiaries. Also includes any other current assets that are not assigned to cash and cash equivalents, receivables, or inventories.

Liabilities not assigned to short-term debt or accounts payable.

Includes any financing item that is not assigned to issuance of debt, issuance of capital stock, repayment or long-term debt, repurchase of capital stock, or payment of cash dividends.

Includes those gains/losses incurred from an event that is both uncontrollable and often occurs in the place where the company is located.

A residual category containing miscellaneous non-operating revenues and expenses netted.

Includes any items not assigned to purchases, selling of fixed assets, or investments.

The amortization of anything that is not a fixed asset (property, plant, or equipment). It includes all items that are considered non-current assets, long-term debt and liabilities. Includes any other items that are not assigned to depreciation and amortization, deferred income taxes, operating gains/losses, extraordinary gains/losses or working capital.

Items not assigned to net fixed assets or intangibles.

Those liabilities not assigned to long-term debt or deferred income taxes.

Also known as ""other operating expenses."" For most companies this includes taxes other than income taxes (except excise taxes, which the company does not actually pay, but only collects on behalf of the government). For financial companies, all expenses other than interest expense and income taxes are included in other taxes.

An option with no intrinsic value. A call is out-of-the-money when the strike price is higher than the current market value of the underlying security. A put is out-of-the-money when the strike price is lower than the current market value of the underlying security.

A condition where it appears a stock has reached a price peak and is now likely to turn down.

A condition in which a price ceiling seems to be in place for a stock. Every time the stock approaches overhead resistance, the price goes down.

A condition where it appears a stock has declined to the point where the selling is over and buyers will likely step in and push the stock higher.