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Finance GlossaryMargin of Safety
Margin of Safety
Definition of Margin of Safety
Margin of Safety refers to the difference between a company’s intrinsic value and its market price. For example, if a stock’s intrinsic value is ₹100 and it trades at ₹70, then the ₹30 difference is the margin of safety.
Related Terms
Free Cash Flow
Free float market capitalization is the market cap of a company based on the total freely available publicly traded outstanding shares. The formula to calculate free float market capitalization is:
Free float market capitalization = Share Price x (Number of Shares Available for Trading – Private and Locked-In Shares)
When calculating the free float market cap of a company, the number of shares held privately or the shares that are locked-in are not taken into account. Typically, these shares are held by promoters and the government.
Free float market capitalization = Share Price x (Number of Shares Available for Trading – Private and Locked-In Shares)
When calculating the free float market cap of a company, the number of shares held privately or the shares that are locked-in are not taken into account. Typically, these shares are held by promoters and the government.
Abc Wave Theory
Abc Wave Theory or Elliot Wave Theory is used to determine the direction of the stock market by identifying recurring waves or patterns over the long term. The theory is named after Ralph Nelson Elliott.
5 Motive or Impulse Waves are formed if the movement is in the direction of the trend. 3 Corrective Waves are formed if the movement is against the direction of the trend.
5 Motive or Impulse Waves are formed if the movement is in the direction of the trend. 3 Corrective Waves are formed if the movement is against the direction of the trend.
Primary Market
The primary market is where the securities are created and first issued to investors. This is where companies raise funds by selling stocks and bonds. Key activities in the primary market are Initial Public Offerings (IPOs), Further Public Offerings (FPOs), and rights issues. The proceeds from these sales go directly to the issuing company or government entity.
Gravestone Doji
A Gravestone Doji is a candlestick pattern that signals the reversal of a bullish trend into a bearish one. The key marker of a Gravestone Doji pattern is the open, low, and closing prices being near to one another.
This is a price action type trading strategy that is formed with a tall upper shadow, which is a signal of a bearish reversal.
This is a price action type trading strategy that is formed with a tall upper shadow, which is a signal of a bearish reversal.
Long-Term Capital Gain Tax
Long-term capital gain tax is the tax imposed on profits from selling shares or financial securities held for a period of at least three years. The tax rate applied is typically lower than the short-term capital gains tax, which are profits from the sale of shares held for a shorter duration.
Autoregressive Model
An autoregressive model uses one or more past values to forecast the current value of an asset.
The model assumes that past values can have an impact on the current value but the number of past values it takes into account can vary.
For example, an AR(1) model will use one preceding value, an AR(2) model will use two preceding values, and so on.
The model assumes that past values can have an impact on the current value but the number of past values it takes into account can vary.
For example, an AR(1) model will use one preceding value, an AR(2) model will use two preceding values, and so on.
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