Share Market Knowledge: After reading these 25 points, it is clear
Not everyone who enters the stock market knows everything about the stock market. Some people get involved in stock trading even when they are attracted by their friends. However, when they do not understand the generalities of the market, they feel left behind. Similarly, some people do not have the necessary information about the stock market to keep the desire to enter the market.
In light of your similar problems and needs, BankingNews.com has highlighted some important terms related to the stock market:
1. Dividends and bonus shares The dividend is the return given to the shareholders from the profit earned by the company. If such dividend is paid in cash, it is called cash dividend and if it is paid in shares, it is called bonus share or stock dividend. In order to capitalize the company’s savings or reserves, the existing shareholders are thus given additional shares (bonus shares) or the paid-up capital is increased. The amount of dividend is decided by the board of directors.
2. Merchant Bank Merchant Bank is an organization that manages the primary issuance of securities, guarantees and collects applications and details for securities trading. 3. Securities brokers A securities dealer who buys and sells securities on behalf of a customer is called a securities broker.
4. Securities trader A securities dealer is a person who buys all or some of the securities issued in the primary market and sells them through the stock market and manages the investment by signing an investment agreement with the customer. A securities dealer buys and sells securities through a customer or a securities broker in his own name.
5. Market maker A market maker is an institution that buys and sells securities in its own name for the purpose of providing liquidity in debentures or collective investment schemes or listed securities issued on the Government of Nepal. 6. Share registrar An organization is responsible for keeping records of securities transactions of organized organizations and for taking care of all the work related to rejecting or registering the filings and updating the information of the shareholders.
7. Debenture Debentures are securities issued on the condition of paying principal and interest at the prescribed rate and time. Its face value is usually Rs 1,000. Debenturers receive interest on their investment at a fixed rate annually or semi-annually. Debenturers receive interest before paying dividends on ordinary shares and preferred shares.Debenturers receive interest before paying dividends on ordinary shares and preferred shares. Even if the organization goes into loss, there is no obstacle for the debenture holders to get the prescribed interest. The relationship between the debenture holder and the organization is like that of a lender and a debtor. If. If the company is unable to pay the interest at the prescribed rate and time, the debenture holders can take action to send the company to liquidation. Most investors who do not want to take risks prefer to invest in debentures.Debenture holders do not have the opportunity to attend the company’s annual general meeting and vote. Debentures are secured (secured by company assets or mortgaged) or unsecured, redeemable (repaid after a certain period of time) or irrevocable and convertible (can be converted into ordinary shares after a certain period of time) or unchangeable in nature.
8. Warrant A warrant is a stock instrument issued in such a way that ordinary shares can be purchased at a specified number and price at a given time. In other words, a warrant is a right given to investors to buy ordinary shares of a company in the future. Generally, warrants are issued along with the bonds to make the issuance of the bonds attractive to the investors. Investors are free to decide in the future whether to buy ordinary shares using a warrant or not.When using a warrant, it is converted into ordinary shares but the bond remains the same. The issuance of a warrant discloses the price to be paid for the purchase of ordinary shares in the future, the ratio of ordinary shares to be obtained using the warrant and the time period for which the warrant has to be used.
9. Blue chip stock Blue chip stocks are the shares of an organization that have been making profits for a long time by efficiently managing the organization and have been paying dividends to the investors as well as winning the trust of the investors by being aware of the accountability towards the investors. Most of these types of shares have a high price and the dividend is medium.
10. Central Depository System of Securities The central depository system of securities is a system that takes care of the securities of all the securities holders and helps them to complete the process of purchase and sale record, transfer, transfer etc. in a simple and quick manner. Under this system, securities holders can open an account by depositing their securities just like depositors keep money in a bank.
This system eliminates problems like loss of securities, loss, theft, issuance of counterfeit shares. This system also helps reduce transaction costs.
11. Guarantee If there is no sale of securities to be issued in the primary market, the agreement to purchase such securities is called securities guarantee.
12. Statement Before issuing securities in public, the concerned organization should publish the statement. The prospectus discloses the details related to the organization that wants to issue the securities and helps the investors to decide whether to invest in the securities of the related organization on the basis of those details.
13. High and low demand for securities The demand for more securities is called high demand for securities and the low demand for securities is called low demand for securities. In case of high demand for securities, there is an arrangement to distribute the securities by giving more burden to the group demanding less and less to the group demanding more securities.
14. Additional value The difference between the issue price and the face value is called premium. The issue of securities at a price higher than the face value of the securities is called securities issue at a premium.
15. Purchase offer and sale offer price The price of the securities that a potential buyer wants to pay is called the offer price. The purchase and sale of securities is completed after receiving the Bid Price / Offer Price marked by the securities brokers on the trading board of the securities market.
16. Paid value of listed securities The sum of the value of the listed securities paid by all the securities holders is called the paid up value of the securities.
17. Market capitalization Market capitalization is the sum of the market value of all securities listed on the stock exchange market. Market capitalization is obtained by multiplying the number of securities listed in the market and their respective market value.
18. Market indicator The market indicator is the ratio between today’s total market value of listed securities and the total market value of a base year. This indicator increases when the value of listed securities increases and decreases when it decreases. Nepal Securities Exchange Market Ltd. in Nepal. Each day produces this type of indicator, called the Nepse indicator.
19. Market price per share The market value of a stock is called the market price per share.
20. Earnings per share Earnings per share are obtained by dividing the company’s net profit by the total number of shares of the company. Earnings per share provide a significant measure of profit for shareholders and individuals outside the company. A company with rising earnings per share is considered to be successful in performance while declining earnings per share is considered a sign of a problem.
21. Net worth The total value of the company’s paid-up capital and total reserves is the company’s net worth. Dividing the net worth by the total number of shares of the company gives the net worth per share or the book value of the shares.
22. Price sensitive information Price sensitive information is information about the company’s dividend distribution or bonus share issue, management changes, expansion plans, financial quantities, important agreements with other parties and events that directly affect the value of securities and other information.
23. Insider business As per the rules, the securities are to be made public to the investors of the company but the securities are not made public. This type of transaction is prohibited by the prevailing system.
24. Downward and upward stock markets Bull market refers to the gradual emergence of the market. In this type of market, along with the improvement of every sector of the economy including industry, banking, insurance, the company’s profits have gradually increased due to efficient management. At this time the share price of listed companies is higher. On the other hand, a downward market for securities refers to the downtrend of the market.In this situation, the market price and market index of listed securities are on a downward trend and there is an atmosphere of frustration among investors.
25. Directors and Board of Directors The people who are responsible for managing the entire business of any company, exercising their rights and performing their duties are the directors of the company. The directors of the company are appointed by the founders until the first annual general meeting and then by the general meeting. In order to be the operator of any company, one has to take shares as prescribed in the rules of that company.