What is
a Share or Stock ?
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.
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.
By owning 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.
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 also affected by all 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
·
Owning
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% annual returns
However, stocks offer no
guarantee of any returns and can lose value, even in the long run
guarantee of any returns and can lose value, even in the long run
·
Investments
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.
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 .
What are
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 analysts would define active shares as those which are
bought and sold at least three times a week. Easy to buy or sell.
