Market Basics
In Simple words,
a share or stock is a document issued by a company, which entitles its holder
to be one of the owners of the company.
A share is issued by a company or can be purchased from the stock
market.
Selling Shares
By owing a share
you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the
capital gain. However, you also run a
risk of making a capital loss if you have sold the share at a price below your
buying price.
Stock Prices in Shares
A company’s
stock price reflects what investors think about the stock, not necessarily what
the company is “worth”. For example,
companies that are growing quickly often trade at a higher price than the
company might currently be “worth” Stock prices are affected by various forms
of company and market news. Publicly
traded companies are required to report quarterly on their financial status and
earnings. Market forces and general
investor opinions can also affect share price.
Quick Facts on Stocks and Shares
Owing a stock or
a share means you are a partial owner of the company, and you get voting rights
in certain company issues.
Over the long
run, stocks have historically averaged about 10 per cent annual returns. However, stocks offer no guarantee of any
returns and can lose value, even in the long run.
Investment in
stocks can generate returns through dividends, even if the price.
How does one trade in Shares ?
Every
transaction in the stock exchange is carried out through licensed members
called brokers.
To trade in
shares, you have to approach a broker.
However, since most stock exchange brokers deal in very high volumes,
they generally do not entertain small investors. These brokers have a network of sub-brokers
who provide them with orders.
Sub Broker
The general
investors should identify a sub-broker for regular trading in shares and place
his order for purchase and sale through the sub-broker. The sub / broker will transmit the order to
his broker who will then execute it.
Active Shares
Shares in which
there are frequent and day-to-day dealings, as distinguished from partly active
shares in which dealings are not so frequent.
Most shares of leading companies would be active, particularly those
which are sensitive to economic and political events and are, therefore,
subject to sudden price movements. Some
market would define active shares as those bought and sold at least three times
a week. Easy to buy or sell.
