WHAT IS A STOCK?A stock is a small share that represents a partial ownership of a company.SHARE MARKET The place where selling and buying takes place.
TO START A BUSINESSFrom one personFrom more no. of personsFrom one or two personsProprietorshipPartnershipLimited company
WHY DOES THE COMPANY ISSUE A STOCK?
The reason is that at some point every company needs to raise money. To do this, companies can either borrow it from somebody or raise it by selling part of the company, which is known as issuing stock. A company can borrow by taking a loan from a bank or by issuing bonds.
WHO WILL RUN THE COMPANY?Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, one vote per share to elect the board of directors at annual meetings is the extent to which you have a say in the company.
INITIAL PUBLIC OFFERINGThe first sale of a stock, which is issued by the private company itself, is called the initial public offering (IPO).
IF YOU ARE UNABLE TO BUY A SHARE DIRECTLY FROM THE COMPANY WHAT WILL YOU DO?
BOMBAY STOCK EXCHANGE(BSE)Oldest and first stock exchange of India (1875)First it was started under banyan tree opposite to town hall of Bombay over 22 brokers.
NATIONAL STOCK EXCHANGE(NSE)Leading stock exchange of India (1994) covers 360 towns and cities in the country.Established by 21 financial institutions & banks like IDBI, ICICI, LIC, SBI
OTHER EXCHANGESLondon stock exchangeNewyork Shanhai Australia Tokyo Hong Kong Toronto NASDAQCalcutta stock exchangeCochin stock exchangeMulti commodity exchangeDerivatives exchangeOTC exchangePune stock exchangeInterconnects exchange
A stock is represented by a stock certificate. This is a fancy piece of paper that is proof of your ownership.
DEMATERIALIZATIONIn today's computer age, you won't actually get to see this document because your brokerage keeps these records electronically, which is also known as holding shares "in street name". This is done to make the shares easier to trade. In the past, when a person wanted to sell his or her shares, that person physically took the certificates down to the brokerage.
BROKERSHe is one acts as an intermediary on behalf of others. A broker in a stock exchange is a commission agent who transacts business in securities on behalf of non members.
SPECULATIONThe activity of buying and selling goods or shares in a company in the hope of making a profit but with the risk of losing money.
SPECULATOR BullBearStagLame duck
BULL MARKETA situation at the stock exchange in which the prices of shares are rising and people known as bulls buy shares in order to make a profit by selling them later at a higher price.
BEAR MARKETA situation at the stock exchange in which company share prices are falling rapidly. People who sell their shares, hoping to buy them back later at a lower price, are called bears.
HOW TO MEASURE THE VALUE OF A SHARE? SENSEXNIFTY
HOW TO READ A STOCK TABLE?
HOW TO CHOOSE STOCKS?Readas much as you can.Start with industries with which you are familiar.Think of products you like or companies that provide services you think are good or popular.Decide how much money you are willing to risk.Learn how to identify stocks with criteria that may indicate potential for future price appreciation.
Determine a method of knowing when to be buying a stock and when to avoid adding new money to your investments.
Don't place orders overnight.Do not impulse buying stocks.Don't sell when a stock falls unless you're sure it's only going to drop further.WARNINGS