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You are Here : Home > Investor Education > Glossary

Glossary to investment terminology : H

 
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Hedge
This is a strategy used to eliminate or reduce the risks of loss that could be brought about by adverse price movements of a security by making an investment in a related security. An example is if you owned a stock and then sold a futures contract stating that you will sell the stock at a set price thus avoiding market fluctuations. Investors use this strategy when they are unsure of the direction the market will take.

Hedging Against Inflation
This is protecting one's savings from the loss of value that is brought about by inflation by investing in such items whose price will go up with the general rise of prices e.g. equity shares.

High
This is the highest price that was paid for a stock during a certain time period. In a trading day, this price is not necessarily the same as the closing price.

High Close
This is a tactic used by stock manipulators. During the final minutes of trading, they execute several small orders of a given stock at high prices to give the impression that the stock is doing better than it actually is because the closing price is the most widely quoted and will attract potential investors to buy the stock.

Historical Volatility (HV)
This is the degree of price fluctuation of a stock over a given period of time e.g. a day. It is directly related to the level of risk associated with a stock; low HV means low risk while high HV means high risk.

Holder of Record
This is the name of an individual or entity who is the registered owner of a security. Dividends and other distributions are paid only to the holder of record.

Holding Company
This is a company that holds enough voting shares (not necessarily 51%) in another company to control management and operations by influencing or electing its board of directors. It is also referred to as the parent company.

Hot Issue
A hot issue is an initial public offering (IPO) that is in great demand. Hot issues are normally oversubscribed. An example is the Safaricom IPO in 2008.

House Rules
These are a stockbroker's internal policies and procedures that describe how customer accounts should be handled. They are intended to make sure that the stockbroker complies with regulatory requirements and are usually more stringent than external rules require.

Hybrid Market
A hybrid market is a stock exchange that allows for trading through the option of an automated electronic trading platform or the trading floor broker system. The Nairobi Stock Exchange is a hybrid market.

Hypothecation
This is when a stockbroker accepts an investor's shares as collateral for a loan to purchase more shares for the investor.