Education corner

Stock Exchanges

  • The stock exchange is the best environment to invest financial resources in liquid assets such as securities, for the purpose of increasing the return on invested capital based on the difference between the asset’s sale and acquisition price, but also through dividends or interest, depending on the type and structure of the financial instrument.
  • Stock exchange investments are an alternative to bank deposits. Investment in listed companies is riskier than bank deposits, but the elements which ensure better returns are more diverse. Thus, most of the listed companies offer the possibility to increase the price of the underlying asset and to identify other sources to increase the invested capital, such as dividends granted in various forms (shares or profit sharing).


  • Share – unit of ownership in the share capital of a company. Shareholders are entitled to a claim over the company’s net assets equal with the number of shares held. Shareholders have the right to be informed about the company’s activity, to participate and to vote in the General Shareholders’ Meetings (GSM), and to receive cash dividends as a distribution of the company’s profit for the year.
  • Ask – the price that a seller is willing to accept for the traded securities, commodities or currency.
  • BET – Bucharest Exchange Trading Index is a free float capitalization-weighted index, comprised of the 10 most liquid stocks listed on the BSE.
  • BET-FI – Bucharest Exchange Trading Investment Funds Index is the first sector index launched by the BSE, reflecting the price movements of the investment funds (SIFs) traded on the BSE regulated market. Fondul Proprietatea is also part of this index.
  • BET-C – the composite index of the BSE, reflecting the price movements of all companies listed on the BSE regulated market in the 1st and 2nd category, except for investment funds (SIFs).
  • Bid – the highest price that a potential buyer is willing to pay for securities, commodities or currency.
  • Coupon – interest paid on a bond, expressed as a percentage of its face value. In case of fixed-rate bonds, the coupon is usually paid on an annual or bi-annual basis.
  • Dividend – companies may distribute dividends in two forms: cash or shares. Generally, dividends are allocated in one of the two forms at certain times (on a quarterly, bi-annual or annual basis), but in some cases both forms may occur. As concerns cash dividends, each shareholder is allocated a certain amount (for example: if the share price is 0.25 lei, the owner of 100 shares will receive cash dividends of 25 lei). Cash dividends are usually paid from the company’s current income or accumulated profit.
  • Stock dividends represent a pro-rata distribution of additional shares. For example, a 10% dividend means that for each 10 shares, the shareholder receives a proportional number of additional shares. If the company has 1.000.000 publicly traded common shares, the stock dividend will increase the company’s free float up to 1.100.000 shares.
  • Derivatives – futures or options contracts derived from certain underlying assets, such as securities or other financial assets.
  • Municipal and corporate bonds – financial instruments issued by public entities (government, central or local public administration bodies) or private entities (companies), which represent fractions of a loan contracted by the issuer and which stipulate the bondholder’s right to receive interest and the issuer’s obligation to repurchase the bonds at maturity, according to the specific bond issue conditions.
  • Closing price – the final price at which a security is traded on a given trading day.
  • Average price – the sum of all prices divided by the number of prices with respect to one single bond.
  • Structured products – financial instruments similar to securities, which are based on an underlying asset, are issued in accordance with a base prospectus and the documents related thereto, and are admitted to trading on the spot market. The issuers of structured products may be credit institutions, investment companies and other financial institutions authorized and regulated by the competent authorities. Although traded in a similar manner to financial instruments on the spot market, structured products share common features with the derivative securities.
  • The risk associated to capital market investments can be defined as the probability to lose a portion of or the entire amount initially invested. Risk perception is different from one person to another; therefore, it represents an important factor that investors should consider when deciding whether to invest in the capital market. Depending on the level of risk undertaken, an investor may opt for a cautious strategy selecting low-risk financial instruments (bank deposits, government bonds, mutual funds or government/corporate bonds), or for balanced/aggressive strategies, including higher risk instruments in the portfolio (shares, futures or options contracts), which yield higher investment returns. The risk linked to financial instruments is threefold: issuer risk (business risk), sector risk and market risk.
  • Market risk arises from the political and economic environment of the country. It is a risk which cannot be avoided as it may affect all issuers, irrespective of the business sector.
  • Business risk represents the probability that a major event may affect a company’s activity, leading to its financial deterioration or bankruptcy. On the capital market there are low risk companies (large and stable companies, with high share liquidity) and companies with higher investment risk, caused by past losses, lower share liquidity or operation in unstable economic sectors. This type of risk can be mitigated by diversifying the investment portfolio, so as to cover financial instruments issued by companies operating in various industries.
  • ROTX – is a free float capitalization-weighted index, which tracks in real-time the price changes of the “blue chip” shares traded on the Bucharest Stock Exchange. ROTX is designed as a tradable index, being calculated in RON, EUR and USD and disseminated in real time by Wiener Borse AG.
  • Trend – the general direction of a market or of the price of an asset. Trends can vary in length from short to long term. For example, a long-term “bull” market often involves short-term downward corrections.

Frequently Asked Questions

    • How do I choose my investment strategy?

A capital market investment should be based on a certain strategy. Such strategy should be developed in consideration of the investor’s risk appetite and the amount available for investment.

    • What are the factors that influence the share price?

The price of shares may be easily affected by events that occur both inside and outside the company. The most relevant factors with high impact on shares are: the national, regional or international political and economic context, the evolution of the economy and of the capital markets, the information released by the company regarding new contracts, new market entries, investments, management changes, significant ownership changes, financial results, articles in the press, investors’ general perception and market psychology, technical analysis related signals.

    • What is the minimum amount required for investment?

The minimum investment amounts are established by the financial intermediaries. To invest via BT Trade – BT Capital Partners trading platform, the minimum amount is RON 5.000 on BSE, EUR 3.000 in foreign trading venues.

    • What do I need in order to invest on the capital market?

You need an intermediation firm, which will carry out all investment-related operations.

    • What is BT Trade?

BT Trade is the online trading platform of BT Capital Partners, the brokerage division of Banca Transilvania.

    • How do I find out about the developments within the companies in which I hold shares?

Listed companies have the obligation to publish their financial statements and other relevant events on a periodical basis.

    • How can I gain from stock exchange investments?

Gains are obtained from the increase in the value of shares and from the distribution of the company’s profit among shareholders.

    • How do I obtain the information necessary for trading?

Stock exchange information can be obtained from brokerage companies, online trading websites, print and online media with economic profile.

    • What are dividends?

The companies’ profits may be distributed to shareholders proportionally with the number of shares held, in the form of dividends.

    • What is a public offering on the capital market?

A public offering is the process whereby a listed company or a company that intends to list its stock sells a portion of its shares to obtain funds.

    • What is a stock exchange?

A stock exchange is an institution through which companies may gain access to finance, investors may place funds to obtain profit and those who own or intend to buy shares may trade.

    • How is the share price determined?

Share price is determined based on a clearly defined mechanism established and controlled by the stock exchange; the main rule which governs this mechanism is supply and demand.

    • What is a stock symbol?

A stock symbol is a combination of two or more characters representing a unique identifier of a traded security, (such as shares) which is used to simplify stock exchange transactions. For example, the stock symbol of the shares issued by Banca Transilvania is TLV.

    • Where can I find out the correlation between listed companies and their stock symbols?

On the Bucharest Stock Exchange website:

    • What are the trading costs?

Financial intermediaries charge a trading fee which represents a percentage of the transaction price and possibly a fixed monthly subscription price.

    • What happens with the profit of the companies in which I hold shares?

The profit of the listed companies may be distributed to shareholders or may be retained within the companies. This decision is made in the General Shareholders’ Meeting of the company.

    • Who is responsible for controlling and monitoring the Romanian capital market?

The Financial Supervisory Authority.



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

To get a feel of ESG principles and more information related to climate change,
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