D

Glossary · PSX term

Diversification.

Diversification is spreading money across different investments to reduce overall risk.

Definition

By holding a mix of stocks, sectors, and asset types, a loss in one area can be cushioned by others. It does not remove risk entirely, but it lowers the impact of any single bad outcome.

Worked example

Holding banks, cement, fertiliser, and tech stocks rather than only one sector is diversification.

Related on PSX Clarity

Concentration risk

Asset allocation

More glossary terms

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Dividend yield shows annual dividend income as a percentage of the current share price. It helps PSX investors compare income from different stocks, but it should be reviewed with payout history, earnings quality, and whether the dividend is sustainable.

Debt-to-equity ratio

Debt-to-equity ratio compares a company's borrowings with shareholder equity. It helps investors understand leverage and balance-sheet risk.

Delisting is the removal of a company's shares from trading on the exchange.

Dilution is the drop in each existing share's ownership when a company issues new shares.

Day trading is buying and selling the same stock within a single trading session.

Deliverable futures

Deliverable futures are PSX contracts where actual shares are delivered when the contract expires.

Disclosure is a company's duty to publicly share information that could affect its share price.

Dividend discount model

The dividend discount model values a stock as the present value of its expected future dividends.

Discounted cash flow (DCF)

DCF values a company by estimating its future cash flows and discounting them to today's value.