what is a share and stock market ?


Share 

To start any company or business a lot of capital is required . it is very difficult that one person can’t put such a huge capital in their company or business so they divided their capital into small pieces so that every person can become a shareholder of their company’s, if they divided into small shares many people can buy a stake in their company and become the owner of their company. Any person can buy shares of any company according to their own capacity.

Share is the part or portion of the capital of a company which is divided into small shares. when you buy a company’s shares you will become a shareholder or equity holder of that company.

Example :-

Like the xyz company’s total capital is Rs 1 crore and the company divides its capital of Rs1 crore into 1 lakh shares @ Rs100/-  at par now value of each share is Rs 100/- this small part of capital is called share. Now this type of capital is called share capital of company’s.

SHARE CAPITAL = total no. of share x price of share

In our country two main share market or stock exchange one of Bombay Stock Exchange (BSE) founded in 1875 and the second is National Stock Exchange (NSE) founded in 1992. Bombay Stock Exchange is the top ten biggest stock market in the world.

               



What is IPO ?

Whenever a company comes to sell their shares for the first time in the stock exchange after verifying themselves by SEBI  (Securities and Exchange Board of India), then it is called Initial Public Offering-IPO. If a company wants to bring IPO then they have to give some information about their finance, promoters, business, the number of shares and its price etc.

What is stock market ?

Stock market is the medium of fund raising for companies. Investors can buy a share in a listed company through the stock exchange market. When business of the company is growing, they can increase the amount of their investment. Once you buy shares of a company you become its shareholder, after that you also have a stake in its profit, which are called dividends.

If for some reason the company’s business goes in loss, the investor also has to suffer loss. The broker who provide the facility to purchase and sale of shares in the stock market, has to register with the market regulator SEBI. 

What is primary share market and secondary share market


Share market is categorized into two group
1. Primary Market
2. Secondary Market


Primary share market :– when a company sells some of its shares through stock exchange for the first time for collecting money from the investors so it has to present an IPO. This is called the primary market. For this companies have to register in the stock exchange. After this the shares are available for purchase of the public. Listed on the stock exchange companies reach investment through the primary market.


Secondary share market :– In this market the formerly issued shares and securities of a listed company are bought and sold. In this market someone else buy share from person at a stock market price in real time. In secondary market shares are sold or transfer by one investor to another. Typically this purchase is done through a broker. Only through the secondary stock market a investor can get this facility to sell his shares to someone else and get out of the market.
In the secondary market institutional and retail investors buy and sell shares among themselves. That is, in the secondary market a shares are traded through stock exchange. Whereas in the primary market the company directly sell its share to investors.






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