Stock exchanges

• They are the right place to invest financial resources in shares in order to increase the initial capital invested. Growth can be achieved either through the difference in price between the time of sale and the time of purchase, or through dividends or interest, depending on the structure and nature of the instrument chosen.
• Stock market investments are an alternative to bank deposits. An investment in a listed company carries a higher degree of risk than a bank deposit, but the ways in which you can increase the capital invested are more diversified. There is the possibility of increasing the price of the asset, but also of other sources such as dividends in various forms (shares or profit-sharing).

Definitions

• Share -represents an interest in the share capital of a company. Shareholders have a right of ownership in the net assets of the company, in proportion to the number of shares held. Shareholders have the right to be informed about the company's activities, to attend and vote at General Meetings of Shareholders (AGMs) and to receive dividends if the company has made a profit.
• Ask-is the price for which a seller is willing to sell securities, commodities or currency.
• BET is a price index weighted by the free float capitalization of the 10 most liquid companies listed on the BVB regulated market.
• BET-FI is the first sector index of the BVB and reflects the overall trend of the prices of financial investment funds (SIFs) traded on the BVB regulated market, to which is added Fondul Proprietatea.
• Bid-is the highest price potential buyers are willing to pay for securities, commodities, or currency.
• Coupon - theinterest paid on a bond, expressed as a percentage of the face value. If the bond carries a fixed coupon, interest is usually paid annually or semi-annually.
• Dividend -there are two types of dividends a company can issue: cash and stock dividends. Usually only one is paid at a certain time (either quarterly, bi-annually or annually), but both can occur. In the case of a cash dividend, a certain amount of money is distributed to each shareholder (for example, in the case of a cash dividend of 0.25 lei per share, the owner of 100 shares will receive 25 lei in total). Cash dividends are normally paid to shareholders out of the corporation's current income or accumulated profits.
• A stock dividend is a pro-rata distribution of additional shares to shareholders. A 10% dividend, for example, means that for every 10 shares held, the shareholder receives an additional share. If the company has 1,000,000 shares outstanding (common shares), the stock dividend will increase the number of outstanding shares of the company to a total of 1,100,000.
• Derivatives - are futures or options contracts that have securities or other financial assets as underlying assets.
• Municipal and corporate bonds - financial instruments issued by public bodies (state, central or local government public body) or private bodies (commercial companies), representing fractions of a loan contracted by the issuer, giving the holder the right to receive interest and the issuer the obligation to redeem them at maturity, under the specific conditions of bond issue.
• Closing price - the last price at which a trade was executed during a trading day.
• Average price - The average price is calculated by summing all related prices and then dividing the amount by the number of prices for a bond.
• Structured products - are financial instruments of a securities nature that are based on an underlying asset, are issued in accordance with a base prospectus, as well as with the documents related to that prospectus, and that can be admitted to trading on the regulated spot market. Issuers of structured products may be credit institutions, investment companies and other financial institutions subject to authorisation and regulation by the competent authority. Although they are traded in a similar way to financial instruments in the spot market, structured products have features in common with derivatives.
• The risk associated with investing in the capital market can be defined as the probability of losing some or all of the amount initially invested. Risk is perceived differently from individual to individual, which is why it is an important factor considered by investors when deciding to invest in the capital market. Depending on the level of risk assumed, the investor may decide to choose a prudent strategy by selecting low risk financial instruments (bank deposits, government securities, mutual funds or government/corporate bonds), or a moderate/aggressive strategy by including in the portfolio higher risk financial instruments (shares, futures, options) which may be rewarded by higher returns. The risks associated with financial instruments have three elements: issuer (company) risk, sector risk and market risk.
• The market risk is given by the political and economic environment existing at country level. It is a risk that cannot be avoided as it can affect all issuers, regardless of the sector.
• Corporate risk is the possibility that a major event may affect the activity of a company, leading to its decline or even bankruptcy. On the capital market there are companies with a low level of investment risk (large and stable companies whose shares have a high liquidity) and companies with a higher level of risk, due to losses, lower liquidity or operating in an unstable economic sector. This type of risk can be reduced by diversifying the investment portfolio - financial instruments of issuers operating in different branches of the economy.
• ROTX is a free float capitalisation weighted price index and reflects in real time the movement of blue chip stocks traded on the Bucharest Stock Exchange. Calculated in RON, EUR and USD, and disseminated in real time by the Vienna Stock Exchange (Wiener Borse AG), ROTX is designed as a tradable index.
• Trend -the general direction of a market or the price of an asset. A trend can be long-term or short-term. For example, a long-term bull market often includes a series of short-term downward corrections.

ESG

What is ESG?

ESG is a concept that encompasses environmental, social and governance criteria that investors might consider when initiating a potential investment.

For familiarisation with ESG principles and more information on climate change, sustainability and non-financial reporting, please visit the following useful links:

• https://www.asfromania.ro/ro/a/2243/finante-sustenabile-si-tranzitia-verde
• https://www.bancatransilvania.ro/relatii-investitori/environment-social-governance
• https://bvbresearch.ro/ReportDashboard/ESGScores
• https://www.sustainalytics.com/
• https://www.bloomberg.com/professional/dataset/global-environmental-social-governance-data/
• https://ecagbac.org/