Basics of Stock market PDF explains stocks as ownership shares in companies traded on stock exchanges, vital to capitalism. It details how stock markets function, facilitating trades via brokers and ensuring transaction credibility.
Participants like investors, speculators, and arbitragers aim for profit, with bulls driving prices up and bears causing corrections. The book contrasts primary markets (new securities issuance) with secondary markets (trading existing securities), emphasizing equities’ high-risk, high-reward nature. Benefits include low entry costs and quick liquidity. It concludes with stock types (common, preferred), market dynamics, and the importance of researching before investing.
Excerpts
STOCK
Plain and simple, a “stock” is a share in the ownership of a company. A stock
represents a claim on the company’s assets and earnings. As you acquire more stocks, your
ownership stake in the company becomes greater.
(Note: Sometimes different words like shares, equity, stocks etc. are used. All these
words mean the same thing.)
SHARE MARKET
A Share market or Stock market, is a private or public market for the trading of
company stock and derivatives of company stock at an agreed price; these are securities listed
on a stock exchange as well as those only traded privately.
The stocks are listed and traded on stock exchanges which are entities a corporation or
mutual organization specialized in the business of bringing buyers and sellers of the
organizations to a listing of stocks and securities together.
Stock market is known as the cradle of capitalism. It is a place where companies come
to raise their share capital and investors go to invest their surplus funds. Stock market
essentially discharges the functions of “the invisible hand” that channels investment into the
most productive ventures so as to optimize the overall productivity of the economy.
Stock Market is a place where financial instruments like shares, debentures,
commercial papers, bonds etc are bought and sold. Stock markets are popularly known as
stock exchanges. There are many popular stock markets in the world. NASDQ, Tokyo Stock
Exchange, London Stock Exchange are the most popular of the lot. There are many
participants in a stock market. Investors, Speculators, Arbitrators, Traders are different type
of participants of a Stock