All you want to know but never asked about the stocks and options markets.

miércoles, 2 de enero de 2013

What is a stock?

No hay comentarios :
image of a stock contract

A stock is a part of the capital of a company, ie each element of the value of its share capital divided into equal parts, which can be bought and sold. When a company is listed in the stock market, its shares can be traded. When we buy a stock we are owning part of the company. Now, we have several advantages of working with stocks, two of which are dividends and appreciation of the value of the shares.

When we talk about dividends we refer to that those who have acquired shares in a company will enjoy benefits which are proportional to the amount of shares they own.

On the other hand, the appreciation of the value of the share is the percentage that increases the capital of a company, ie, the more worth on the stock market, the greater the value of its shares. With this we also have the opportunity to buy stocks when they are at a reasonable price and sell them when they have increased their value.

Now with the earnings that have accumulated the bought stocks we can also take the decision to invest in another company in order to diversify and increase our profits. As another advantage we have the opportunity to get our investment in any moment that we want.

One of the reasons why companies which do not have the collateral for a bank loan turn to the valorization of of its project in stocks is that this method works as an initial investment in which the total value of the company is divided equitably. Now, if the business plan is successful and the capital of the company increases, the values ​​of its shares rise, but otherwise the value of the shares tend to fall.

Thus banks, exchanges or banking intermediaries conduct their operations through securities as stocks for buying and selling. This can be done in two ways: spot and forward.
  • Cash or spot: It refers to the transaction in which a buyer receives a number of shares in exchange for giving money to a seller.
  • Forward: It refers to the type of operation which is characterized by an agreement where the parties establish a deferral for the implementation of the compensation, which translates into the ability to:
    • Buy forward: When the buyer pays in cash until the due date, however receives the stock inmediately.
    • Sell forward: When the seller receives money from a number of stocks, but the buyer receives the shares until a set date.
In general terms, the importance of the stock market is that dividends and earnings that can be earned are proportional to the number of shares adquired by the inverstor, however these stocks have the same value with respect to each other. This greatly facilitates the analysis by experts as they study the same asset and therefore the opinion of analysts in a given time is not about different things but about the same.

Currently the major stock markets of the world are: New York, Tokyo and London.

In Europe, the major stock exchanges are London (first European market) and Frankfurt, the seat of the influential German banks, the most powerful in Europe. The Madrid Stock Exchange is the fourth in Europe and tenth in the world.

Stock markets in Paris, Brussels or Amsterdam, which also have joined Euronext, close the group of main global markets. Finally, supported by the booming economies of the Far East stock exchanges in Hong Kong, Seoul, Singapore and Bangkok are increasingly influential due to the large companies that have actually stayed there.

No hay comentarios :

Publicar un comentario