What is Portfolio Diversification ?

Portfolio Diversification is a technique were the investments are diversified to different sectors and companies shares, rather than investing them in one company. This will reduce the risk of any impact when the invested company under performs.

What is a Portfolio ?

A portfolio is collection of assets or financial instruments like Share,Mutual funds,Debentures,Bonds.

What is Ask Price ?

Ask price is the buying price of your stock. The price offered to you for buying the stock.

What is a Bid Price ?

Bid Price is the selling price of the your stock. The price offered by you to sell the stock.

How to acquired Equity Shares ?

Equity Shares can be acquired be 2 ways.

• Primary Market - Initial Public Offering (IPO) or Private Placement.
• Secondary Market - Through Brokers registered with Exchanges.    

Value Stocks

Values Stocks are stocks which have an hidden value when compared to the market price and also have the potential to increased in the market price up to the hidden value. The market price of these shares have gone down due to some bad news or temporary performance of the company  etc. The market price of these companies will increase to hidden values in the future. 

What is Growth Stock ?

Shares of Companies which has potential to grow faster than the companies in the same sector or industry is called Growth Stocks. General these companies give very less dividends or no dividends and reinvest the remaining into the company for growth or expansion .

Factors influencing the price of the stock ?

There are various factors affecting the price movement of a stock which can be broadly classified into  and

• Stock Specific factors
• Market Specific factors

Stock Specific Factors

• Future Earning Capacity 
• Financial health of the Company
• Management Team

Market Specific factors

• World Economy
• Political Stability
• Budgets
• Wars
• Law and order in the Country

   

What is a treasury bills ?

Treasury bills are like bonds with maturity period lesser than one year. The lender lends money on  a discount rate to the issuer. The Face value (bill value) will be repaid wholly on maturity.

Generally, Governments used these treasury bills as debt instrument to meet there temporary cash demands. 

What is a Convertible Bond ?

Convertible bonds are bonds with options to convert them into equity shares of the issuing company.

Zero Coupons Bonds

Zero coupons bonds are bonds with no periodic interest paid . The money borrowed by the issuer will  be discounted with interest paid on the maturity date.The face value of the bonds will be fully paid during the maturity date.

Face value : value of the bond is called face value.

Fixed Rate Bonds

Bonds with a agreement to repay the loan amount on a fixed date (maturity date) with a periodic payment of interest till the maturity date.

What is a Bond ?

     A bond is a statement or note which is issued by Governments,Companies,etc to the lender for borrowing money. The lender lends money to the issuers in return of the note to repay the loan amount on repayment date (maturity date).

Types of Bonds

• Fixed Rate Bonds
• Zero Coupon Bonds

Cumulative Convertible Preference Shares

These are a type Preference Shares whose dividend gets accumulated if not paid. After a specific date the shares will get converted into equity shares of the company.

Cumulative Preference Shares

Cumulative preference share are preference share on which divided gets accumulated if unpaid till the divided for equity share holders.

Types of Preference Shares

• Cumulative Preference Shares 
• Cumulative Convertible Preference Shares

Preference Shares

• Preference Share are share which have privilege to get a fixed rate paid regular over common shares. 
• These share voting rights over the common shares. 
• Asset are allocated in priority during bankruptcy than common stock. 
• While liquidation common shares can be liquidated easily than Preference shares

Bonus Shares

Bonus shares are shares which are allocated  for free to share holders, based on the total shares owned .

Rights Issue/ Rights Shares

The issue of new shares to the existing share holding in a ratio at a fixed price.

Example

1:2 Rights issue would entitle the share to holder to get 1 share for ever 2 shares he owns at a mentioned price. Generally, fixed price will be the discounted price from current market price.

Primary Market and Secondary Market

Primary Market
 In Primary Market the securities are offered to the public for raising capital and funds.

Secondary Market
 Secondary Market is a place whether equity which has been issued in the primary markets are traded.

What is Secondary Market ?

It is a market where Securities are traded after Initial public Offering (IPO). Secondary market includes equity market and debt markets (bond market).

Global Depository Receipts

GDR is a global financial vehicle which always companies to raise capital in two or more different stock markets or exchanges.

American Depository Receipt

Depository receipt specific to USA.

Depository Receipt

A financial instrument issued by a bank,representing a foreign company which can be traded in local stock exchange.

Delisting of Securities ?

Delisting of securities means permanently removing of securities from a Stock Exchange. When a stock is delisted, then the stock cannot be traded in that exchange.

Private Placement and Public Issue

Private Placement : When the issue of company shares is made only to a selected set of people .

Public Issue: When the issue of Company shares is made to public is called public issue.

what is Issued Shares ?

Total no of shares that is authorized to be sold to public,institutional investors or retained by company .

Issued Shares is also called as "Issue Stock".

What is Market Capitalization ?

Current Share Price multiplied by the no of shares in issues is called Market Capitalization.

 Market Capitalization = Current Share Price * Total No Of Shares Issue

What is a Primary Market ?

Primary Market is place where new sales of shares by the company take place. Face value is the price of unit share .

What is Premium or Discount rate in stock market ?

Premium : When the price of the share is sold above the face value it is called Premium.

Discount Rate: When the Price of the share is sold below the face value it is called Discount Rate.

What is a Face Value ?

Face Value is the value of the Equity Share of the Company.

Types of Debentures

There are Two types of debentures

1. Convertible debentures : Convertible debentures are debentures which can be converted into equity shares of the liable company. Since these debentures are convertible they carry low interest rate.                   
2. Non Convertible debentures : Non Convertible debentures which cannot be converted in equity shares of the liable company. Since these debentures are not convertible they carry high interest rate.

What is an IPO ?

IPO - Initial Public Offering.

It is the First sales of Shares of a Private Company to Public.

What is a Debt ?

Amount of Money Owed by an Individual/Corporate to another Individual/Corporate.

Owed : An obligation to be return something which was received earlier.

What is a Debenture ?

Debentures in another type of debt instrument where asset or collateral is not required. Like bonds they do not have  any maturity dates for repayment.

Types of Debentures

1. Convertible Debentures
2. Non Convertible Debentures

What is a Mutual Fund ?

Mutual Fund is a body which is legally eligible to collect money from individuals/corporate and in turn invest in different financial instruments like Bonds,Equity Shares, Debentures.

What are the types of Investments ?

Investments are majorly classified into 2 types.

1.  Physical Assets : Real estate,Commodities (metals,non metals).
2. Financial Assets : Saving in banks,Security Markets like Shares,Bonds,Debentures etc.

What is an interest ?

The money paid in return for the borrowed money is called Interest.

What is an Investment ?

Money which is earned is partly spend and the remaining is saved for future expense.
This saved money in turn used get better returns is called Investments.

What is a Derivatives ?

Derivatives are products whose values are derived from one or more variables. These variables are called underlying.

For Example: 

the underlining asset can be Equity,Index,Forex,Commodities etc.

What is Equity Capital ?

Equity capital is the total value of assets owned by the company minus the liability.

Equity Capital = Assets - Liability

What is an Shares ?

 The total equity capital of the company is divided small units of equal value is called shares.

For Example:

  X Company has Equity Capital of  Rs 10000 and if we divide into Smaller unit of  Rs.10 then the company is said to have 1000 Equity Shares

What are the Stock Exchanges in world ?

There are many Stock Exchanges in the worlds. The following are the list of some major stock exchanges around the world.

SrNo	Stock Exchange	Abbreviation	Country
1	NYSE	NewYork Stock Exchange	USA
2	NASDAQ	National Association of Securities Dealers      Automated Quotations	USA
3	TSE	Tokyo Stock Exchange	Japan
4	LSE	London Stock Exchange	England

What is Stock Exchange ?

Stock Exchange is a placed where Shares of different Companies are traded between Individuals,Investors etc in electronic or manual form.