BASIC INVESTMENTS : Lesson 2

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As stated earlier, three most important markets at the world level are as follows :
1. Stock Market
2. Currency Markets or Forex market 
3. Commodities Market


Starting from STOCK MARKETS, following characteristics explains them :


1. In order to raise large capital from the market and extend their businesses, companies convert themselves into joint stock corporations and distribute their shares in the market.


2. Shares are the units of ownerships of the shareholder in the company. The number of shares he holds, describes the amount of interest he has in  the company. 

3. Shares are of two types : 
a) Equity Shares 
b) Preference Shares
4. Equity Shares : Those shares which get a certain amount of profit as dividends, though at last, and the voting rights on carious decisions taken by the company . The liability of an equity shareholder is restricted to the amount of the share but they face high risk.

5. Preference Shares : These type of shares are known as the hybrid securities because of their mixed nature. They contain the characteristics of both shares and debentures. Though preference shareholders are paid only when the company has profits (character of equity shares), they are a preference to the company in paying a fixed rate of interest but no voting rights (characterstics of preference shares).

6. Debentures/ Bonds : They form the borrowings of the company in the form of loan capital. The debentureholders buy debentures at a fixed price and has no risk, as the company has the full intention of returning back the profits. They always get a fixed amount of interest as profits. Thry don't have any voting rights. 


7. Stocks are traded in a stock exchange.
For example : the stock exchanges of india are BSE ( Bombay Stock Exchange) and NSE (National Stock Exchange). 


8. In order to trade in a stock market, one needs a demat account for long term buying and trading account for trading purposes.


9. Investments is totally different from trading and speculation. Investment is not speculation. 


10. Investment is that process where the investor invests a principal amount for a period and gets that amount in return along with a calculated amount of return as interest to the principal. 

These were the basics of investment in stock markets.
However, knowledge is elaborately provided in books. Therefore,  I would highly recommend you to read these books as stated down.

Book no 1 : book

Book no 2 : book

Book no 3 : book

Book no 4 : book

DISCLAIMER : If you make a purchase from the above links, I make a small commission .
However, the actual price for you remains the same .

Regards,
Ankita Gupta ❤

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Instagram handle : Instagram

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