WHAT ARE DEBENTURES?: MEANING OF DEBENTURES, VARIOUS KINDS OR TYPES OF DEBENTURES, HERE IS THE COMPLETE OVERVIEW
January 27, 2024
INTRODUCTION Debentures are 'creditorship securities' which are also known as Debt capital. This type of capital is a kind of loan taken by the company for a specified period of time. Debentures occupy a very significant place in the financial planning of the company. A Debenture is the acknowledgement of a debt. It is a certificate issued by a company under its seal acknowledgement a debt due by it to its holders. In the U.S.A, Debentures or bonds are secured by tangible physical assets of the company and debentures are secured only by the general creditworthiness of the company. If you are beginner in the stock market and you want to know about stock market then you can read here https://businessinfo29.blogspot.com/2023/11/stock-market-beginners-guide.html If you want to know online trading procedure in the stock market then you can know here https://businessinfo29.blogspot.com/2024/01/if-you-want-to-start-online-trading-in.html If you want to know what things should b
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STOCK MARKET : A BEGINNER'S GUIDE FOR UNDERSTANDING WHAT IS STOCK MARKET AND HOW IT WORKS ?
November 16, 2023
STOCK MARKET : A BEGINNER`S GUIDE
INTRODUCTIONTO STOCK MARKET
Stock marketis the capital market of a country , it is very important part of the financialsystem of a country .It directly leads to the capital formation in the country, economic growth of the country etc. It plays an important role in the globaleconomy . There are numbers of stock market in the world and the large numberof shares listed and traded therein. Stock market includes the many indices suchas NASDAQ , SENSEX AND NIFTY , S&P 500 ,DOW JONES . With the proper knowledgeof stock market anyone can start investing and trading in it .
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1. WHAT IS STOCK MARKET ?
Now questionarises what actually the stock market is . Your wait is over , we can understand itsmeaning in simple words here . Stock market comprises of two words ‘ STOCK ‘ and ‘MARKET ‘ . Stock here simply means the ‘ VARIOUSKINDS OF SECURITIES ‘ and market refers to the place where the ‘ MARKET FORCESOF DEMAND AND SUPPLY ‘ interact with each other and a specific price is determined. As I told earlier that it is a capital market where from companies raisescapital for long term through INITIAL PUBLIB OFFER (IPO). After the IPO theshares of the companies are listed on the stock exchange and traded .
2. PLAYERS IN THE STOCK MARKET
· INVESTORS: These are the individuals orinstitutions who invest in the company by purchasing shares of the particularcompany . They are also called ‘SHAREHOLDERS OF COMPANY '
· BROKERS : These are the intermediariesbetween the investors and company . Brokers helps the clients to purchase thevarious kinds of securities , and also facilitates in performing the various transactions,etc.
· COMPANIES : Raises the capital from the stockmarket and sells the shares . The price of the shares is directly influenced byits financial performance , and its goodwill in the market .
· REGULATORS : These are the governing bodies forstock market , regulates and continuously monitors the activities happening inthe stock market .
3. UNDERSTANDING STOCK PRICES :There aremany factors which influence the price of the stock market , some of them areas follows :
· First and foremost is the marketforces of demand and supply , higher the demand for the share , higher will theprice of the share.
· As told earlier the financialperformance of the company such as higher NET PROFIT , HIGHER EARNING PER SHARE (EPS ), RETURN ON INVESTMENTetc.
· Market indices shows the situationand condition of the stock market .
4. TYPES OF SHARES
· EQUITY SHARES : These are the shares whichrepresents the ownership rights . The individuals or institutions holding equityshares is called ‘EQUITY SHAREHOLDERS‘ and they have the ‘ VOTING RIGHTS‘.
· PREFERENCE SHARES : These are called preference sharesbecause they are preferred over equity shares at the time of making payment ofcapital and dividend.
5. RISK AND RETURN
· Risk means ‘UNCERTAINTY ‘ .There is uncertainty in the stock market that whether the price will fall orrise in the future
· Apart from that , risk and return aredirectly related to each other it meanshigher the risk higher will be the return but this is not true in the every case.
6. MARKET ANALYSIS
· Before investing detailed market analysisshould be done by the investor . There are two kinds of investors : one whoinvest for LONG TERM and other one who invest for SHORT TERM ,accordingly market analysis should be done . There are two types of marketanalysis as follows :
· FUNDAMENTAL ANALYSIS : This analysis involves analysis offundamentals of the company such as RETURN ON INVESTMENT , DIVIDEND YIELD ,DIVIDEND PAYOUT RATIO , EARNING PER SHARE , TURNOVER RATIO etc.
· TECHNICAL ANALYSIS : This analysis involves the usage ofpast data . This analysis is done to predict the price of share forshort term period by using various charts and techniques .
7. INVESTMENT STRATEGIES
Before investing proper strategy tobe selected and execute the same accordingly.
· INTRA DAY TRADING : This means buying and selling thesecurities within the same day.
· LONG TERM INVESTING : This includes buying and sellingthe securities and holding it for longer period of time .
8. DIVERSIFICATION
It is the technique to prevent therisk . Diversification means buying different kinds of securities and dividingor minimizing the risk by not investing in only one sector . “ DO NOT PUT YOUR ALL EGGS IN ONEBASKET " – WARREN BUFFET .
9. TYPES OF RISKS
There are two kinds of risk namely:
· SYSTEMATIC RISK : This is the risk which AFFECTS THEENTIRE MARKET OR SYSTEM.
· UNSYTEMATIC RISK : This is the risk which is SPECIFICTO A COMPANY OR INDUSTRY . FOR EXAMPLE – Lack of proper supply of auto parts carmanufacturing companies facing problems.
10. STAYING INFORMED
There is the need to regularlyupdate yourself by watching or listening financial news and market updates .
Watch andmonitor the company’s performance through detailed analyses of various reports issuedby company from time to time .
CONCLUSION
Itis concluded that with the proper understanding of the stock market andfundamentals of company , investment can be done by anyone but learn withthe passage of time which can be a great thing . Take the risk to that extentonly to which you are able to take and avoid rumors prevailing in themarket.
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Beginner's guide for understanding all about the stock market
Labels:Beginner's guide for understanding all about the stock market
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