STOCK MARKET

STOCK MARKET

1. What is a stock?

   • he Stock is a financial instrument that represents ownership in a company or corporation and represents a proportionate claim on its assets and earnings. Stock ownership implies that the shareholder owns a slice of the company equal to the number of shares held as a proportion of the company's total outstanding shares.
   • Common and Preferred Stock
     • While there are two main types of stock—common and preferred
       • The main distinction between the two is that common shares usually carry voting rights that enable the common shareholder to have a say in corporate meetings

2. Why do companies sell stocks?

   • Companies need resources and require significant amounts of capital, depending on the scale and scope of the start-up of the company, for this reason they issue shares as they require access to a huge amount of capital.
   • Raising Capital
     • A startup can raise such capital either by selling shares (equity financing) or borrowing money (debt financing). Equity financing, therefore, is the preferred route for most startups that need capital.

3. How companies list shares?

   • the companies need access to much larger amounts of capital,it can do so by selling shares to the public through an initial public offering (IPO).Once the company's shares are listed on a stock exchange and trading in it commences,
   • How Share Prices Are Set
     • The prices of shares on a stock market can be set in a number of ways, but most the most common way is through an auction process where buyers and sellers place bids and offers to buy or sell. When the bid and ask coincide, a trade is made.
     • A demand is the price at which someone wants to buy and an offer is the price at which someone wants to sell.

4. Why and how shares fluctuate?

   • The price of these shares will fluctuate as investors and traders assess and reassess their intrinsic value, there are many different ratios and metrics that can be used to value stocks, of which the single-most popular measure is probably the Price/Earnings (or PE) ratio.

5. Why invest?

   • one of the reasons is stock returns arise from capital gains and dividends. A capital gain occurs when you sell a stock at a higher price than the price at which you purchased it.
   • Benefits of Stock Exchange Listing
     • liquidity, stock options, analyst coverage, institutional investors, acquisitions.

6. How to invest?

   • we must know that to buy or sell a stock you would need to establish an investment account and is maintained by stockbrokers, they buy and sell the stock for the clients they represent. Stockbrokers receive either a percentage of the sale or a flat rate per stock trade

7. Is it important supply and demand in Stock Market?

   • it is actually very important, since for every stock transaction, there must be a buyer and a seller; because of the immutable laws of supply and demand, if there are more buyers for a specific stock than there are sellers of it, the stock price will trend up. Conversely, if there are more sellers of the stock than buyers, the price will trend down.

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