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FAQs On Stock Market

This document provides an overview of key concepts related to investing in stocks and the stock market. It defines what equity shares are and how they represent ownership in a company. It also explains different types of returns investors can receive, such as capital appreciation from price increases, dividends from company profits, bonus shares from capitalizing reserves, and rights issues that allow existing shareholders to purchase new shares. Additionally, it outlines some risks of investing in stocks compared to other assets and describes where and how individuals can purchase stocks, including through initial public offerings and stock exchanges.

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25 views18 pages

FAQs On Stock Market

This document provides an overview of key concepts related to investing in stocks and the stock market. It defines what equity shares are and how they represent ownership in a company. It also explains different types of returns investors can receive, such as capital appreciation from price increases, dividends from company profits, bonus shares from capitalizing reserves, and rights issues that allow existing shareholders to purchase new shares. Additionally, it outlines some risks of investing in stocks compared to other assets and describes where and how individuals can purchase stocks, including through initial public offerings and stock exchanges.

Uploaded by

avjose
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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FAQs on Stock Market

A V Jose, Associate Professor ,


SCMS , Kalamasserry
Equity Share
 Represents ownership in a company

 Holder of the such share is a member of the


company eligible to share many benefits
from the company
Returns from investment in shares
 Capital appreciation
 Dividend
 Bonus shares
 Rights issue
What is Capital appreciation
( capital gains)
 Difference between buying price and
selling price of a share. People are not
looking at the dividend when they
purchase share but the capital
appreciation over a period of time.
Dividend
 Part of profit distributed by the company
among the investors
 It is percentage of the paid up value or face

value of the share


Bonus share
 Shares issued by companies to their
shareholders free of cost by capitalisation of
accumulated reserves from the profits
earned in the earlier years
What is a Rights Issue
 In a Rights issue , a company issues new
shares by giving existing shareholders the
right to purchase new shares in proportion
to their existing holding ( can be offered at a
discount also)
What are the risks in investing in
Shares
 Equity shares are “ High Risk High return
Investments”
 Compared with Small savings, bank deposits,

PPF Debentures, Bonds etc. it is risky


 A good scrip picked up at the right time

could fetch fairly good returns ( infosys)


 Sometimes the invested fund itself may be

eroded( HFCL)
Preferential allotment of shares

Fresh allotment of shares to
promoters, their friends and
relatives on a preferential basis
Face Value of share
 Par Value - nominal value of the share
Issue at par
 Issued at the same price as the face value
of the share
Issue at Premium
 When issued at a price above the face value
of the share
What is a Bond
 It is a promissory note issued by a company
or government to its lenders
 Lenders earns interest
Where can one buy shares?
 IPO
 Stock market
IPO
 Initial Public Offer- when company offers its
shares to the general public for the first
time ever, it is known as IPO.After IPO these
shares are listed in stock exchanges
Stock exchange
 It is a place where the buyer and seller meet
to trade in shares in an organised manner .
 There are 23 stock exchages in India
 Controlled by SEBI
What is the function of the stock
market?
 Stock market enhances capital formation in
the economy and it comprises of
 Primary market
 Secondary market

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