Beginners Questions

1.Can I trade when markets are closed or shut down?

No

2.Is it possible to have varied demat and trading accounts?

Yes

3. Can I trade without a stockbroker?

No

4. What is bottoming out?

It is a face when the stock falls downwards to its lowest peak and is expected to reach to rise in the
coming days.

5. Is it safe to invest in unlisted stocks as a beginner?

No, as a beginner there is lack of experience and investing in unlisted stocks can often accelerate the
losses and drag the investor into scam.

6. What is considered as stock?

A stock represents ownership in a company. When you buy a stock, you become a shareholder and
own a small portion of that company.

7. What is the difference between stocks and bonds?

Stocks represent ownership in a company, while bonds represent debt issued by a company or
government. Stocks offer potential for capital appreciation and dividends, while bonds provide
regular interest payments and repayment of principal.

8. What is the stock market?

The stock market is a marketplace where stocks (shares) of publicly traded companies are bought
and sold by investors.

9. What is a stock exchange?

A stock exchange is a regulated marketplace where stocks, bonds, and other financial instruments
are traded. Examples include the New York Stock Exchange (NYSE) and NASDAQ.

10. What is a dividend?

A dividend is a portion of a company's earnings that is distributed to its shareholders as a reward for
owning the stock. Dividends are usually paid quarterly.
11. What is the role of a stockbroker?

A stockbroker is a licensed professional who buys and sells stocks on behalf of clients in exchange for
a commission or fee.

12. What factors can influence stock prices?

Stock prices can be influenced by factors such as company earnings reports, economic indicators,
investor sentiment, geopolitical events, and changes in interest rates.

13. What is a market index?

A market index is a measurement of the value of a section of the stock market. It represents a
hypothetical portfolio of securities that represent a particular market or sector.

14. What is the S&P 500?

The S&P 500 is a stock market index that tracks the performance of 500 large companies listed on
stock exchanges in the United States. It is widely regarded as one of the best indicators of the U.S.
stock market.

15. What is a blue-chip stock?

A blue-chip stock refers to a well-established and financially sound company that has a history of
stable earnings and a reputation for reliability. These stocks are typically considered less risky
investments.

16. What is a stock split?

A stock split is when a company divides its existing shares into multiple shares. For example, in a 2-
for-1 stock split, shareholders receive two shares for every one they previously owned, but the
overall value of their investment remains the same.

17. What is market capitalization (market cap)?

Market capitalization is the total market value of a company's outstanding shares of stock. It is
calculated by multiplying the current share price by the total number of outstanding shares.

18. What is the difference between a market order and a limit order?

A market order is an order to buy or sell a stock immediately at the current market price. A limit
order is an order to buy or sell a stock only at a specific price or better.

19. What is the difference between a bull market and a bear market?

A bull market is characterized by rising stock prices and investor optimism, while a bear market is
characterized by falling stock prices and investor pessimism.
20. What is insider trading?

Insider trading refers to the buying or selling of a company's stock by individuals who have access to
non-public, material information about the company. It is illegal and can lead to severe penalties.

21. Which agency is responsible for regulating stock market?

Securities and Exchange Commission (SEC)

22. Sensex has how many companies?

30 companies

23. Which financial statement provides information about a company’s revenues and expenses over

a specific period?

a) Balance sheet

b) Income statement

c) Cash flow statement

d) Statement of retained earnings

b) income statement

24. which financial market can u trade 24/7 5 days a week?

forex

25. which market can u trade 24/7 all days?

crypto

26. what does ask price mean ?

Ask price is the price at which a seller is willing to sell a security.

27 .what does bid price mean ?

Bid price is the price at which a buyer is willing to purchase a security.

28. what does spread mean ?

Spread is the difference between the bid price and the ask price of a security.

29. what are bonds ?

Bonds are debt securities issued by governments, municipalities, or corporations to raise capital.
30. what are ETFS

ETFs (Exchange-Traded Funds) are investment funds that trade on stock exchanges, holding assets
like stocks, bonds, or commodities.

31. what are limit orders ?

Limit orders are instructions to buy or sell a security at a specified price or better.

32. what is full form of NFT ?

NFT stands for Non-Fungible Token.

33. why do we invest in several stocks instead of one?

We invest in several stocks instead of one to reduce risk through diversification across different
companies and sectors.

34. what are preference shares?

Preference shares are a type of equity security that usually entitles the shareholder to a fixed
dividend payment, prioritized over common shareholders, and typically does not carry voting rights.

35. what is averaging down?

Averaging down is a strategy where an investor buys additional shares of a stock at lower prices than
the original purchase price, thereby reducing the average cost per share of their investment. This is
done with the expectation that the stock's price will eventually rebound, allowing the investor to
profit from the overall lower cost basis. It requires careful consideration of the stock's fundamentals
and market conditions to mitigate risks.
Advance Questions

1. How do market makers influence liquidity and pricing in the stock market?

Market makers continuously offer to buy and sell securities, creating liquidity in the market. By
providing liquidity and reducing the bid-ask spread, market makers contribute to efficient and cost-
effective trading for investors.

2. Compare and contrast fundamental analysis and technical analysis as approaches to evaluating
stock investments. How can these methods be combined effectively?

fundament analysis is the process of looking into the companies news, fiancials and cash low
statements along with other statements to figure out if it is a good company to invest in. Technical
analysis focuses on statistical trends and charts of the company over time. By integrating both
approaches, investors can identify undervalued stocks that also have short-term momentum.
Combining Fundamental and Technical Analysis.

3.What role do macroeconomic indicators (e.g., GDP growth, inflation rates) play in influencing stock
market trends and investor sentiment?

When economic indicators suggest a strong and growing economy, investors tend to have more
confidence in the market, leading to increased demand for stocks and higher stock prices.

4. Explain the concept of alpha and beta in relation to stock returns. How can investors use these
metrics to evaluate and compare investment opportunities?

Beta is used to measure the volatility of a security or portfolio. Alpha is the excess return on an
investment after adjusting for market-related volatility and random fluctuations. when beta is
between 0.5 to 1.5 and alpha around is a good investment.

5. Explain the concept of market liquidity and its importance for investors.

Market liquidity refers to the ease with which assets can be bought or sold in a market without
causing significant price changes.

6. What are derivatives, and how do they differ from stocks?

Derivatives are financial instruments whose value is derived from the value of an underlying asset,
such as stocks, bonds, commodities, or currencies. Unlike stocks, which represent ownership in a
company, derivatives are contracts between two parties that specify conditions under which
payments are to be made between them.

7. Explain the concept of options trading.

Options trading involves buying and selling contracts that give the holder the right (but not the
obligation) to buy (call option) or sell (put option) a specified amount of an underlying asset (such as
stocks) at a predetermined price within a specified timeframe.

8. What is algorithmic trading, and how does it impact the stock market?
Algorithmic trading (or algo trading) refers to the use of computer algorithms to automatically
execute trading orders in the stock market. It can execute trades at high speeds and large volumes,
potentially impacting market liquidity and price volatility.

9. What are the risks associated with leveraged investing, such as margin trading?
Leveraged investing involves borrowing funds to increase the potential return of an investment.
Margin trading, for example, allows investors to buy more stocks than they could with their own
capital. However, it also amplifies losses if the investment performs poorly, potentially leading to
margin calls and forced liquidation of assets.

10. How did the COVID-19 pandemic impact global stock markets in 2020, and what were some key
strategies investors employed to navigate the volatility?

The COVID-19 pandemic caused significant volatility in global stock markets in 2020. Initially, markets
experienced sharp declines as uncertainty over the pandemic's economic impact grew. Investors
diversified portfolios, focused on sectors resilient to lockdowns (e.g., technology, healthcare), and
utilized defensive strategies like hedging and increasing cash positions. Central bank interventions
and fiscal stimulus measures also provided support, contributing to market recoveries later in the
year.

11. How did the rise of cryptocurrencies, particularly Bitcoin, impact traditional financial markets and
investor sentiment? What are the risks and opportunities associated with integrating
cryptocurrencies into investment portfolios?

The rise of cryptocurrencies, notably Bitcoin, introduced new asset classes and blockchain
technology innovations to financial markets, diversifying investment opportunities. However,
regulatory uncertainty, volatility, and security concerns associated with cryptocurrencies have posed
risks for investors and traditional financial institutions. Institutional adoption, regulatory frameworks,
and technological advancements continue to shape investor sentiment and integration strategies,
highlighting ongoing market evolution and risk management challenges.

12. HOW MANY SECTORS ARE THERE TO INVEST IN ?

11

13. NAME 3 STOCK EXCHANGES

New York Stock Exchange (NYSE) – USA, NASDAQ – USA, London Stock Exchange (LSE) – UK, Tokyo
Stock Exchange (TSE) – Japan, Shanghai Stock Exchange (SSE) - China
Hong Kong Stock Exchange (HKEX) - Hong Kong, Bombay Stock Exchange (BSE) - India

14. WHY IS THE MARKET GOING UP BUT STOCKS ARE GOING DOWN

In India, what most people refer to as the "market" is the Sensex which is a weighted index of stocks.
Notice I said weighted and not EQUALLY weighted. Some stocks have a higher weightage than others.
In fact, our Sensex is so concentrated that 16% of it depends on Reliance Industries while Reliance,
HDFC and HDFC Bank make up 35% of the Sensex while Financials as a whole count for almost 40% of
the Sensex. Just to put it there, the Sensex is supposed to be an index of the 30 largest companies in
India but is as dependent on the top 5 as it is on the bottom 25. Unless you buy Reliance Industries
or any of the top index components, your portfolio will usually have no correlation with the market,
because the "market" doesn't really exist- it's just the biggest companies in India.
 15. WHEN WAS NSE ESTABLISHED ?

1992

16. BSE BECAME THE FIRST STOCK EXCHANGE IN INDIA TO LAUNCH COMMODITY DERIVATES
CONTRACT IN GOLD AND ..?

SILVER

17. where are headquarters of nse located ?

MUMBAI

18. when was nifty founded

1996

19. what is the name of contract signed on a specific date between a buyer and seller for a future
date?

contract for future

20. The marketplace in which instruments of securities are exchanged directly between the
fundraiser and the purchaser is termed as?

A. The primary market

primary market

21. Which of these factors drives the Sensex to fluctuate?

A. Government monetary policy

all of the above

22. what does overbought of a stock mean?

Overbought of a stock means that the price of a stock has risen sharply and quickly due to increased
buying interest, often driven by investor enthusiasm or speculation. It suggests that the stock may be
trading at a price that is higher than its intrinsic value, making it vulnerable to a potential correction
or decline in price.

23. how does leverage in making more money while putting u at more risk ?
Leverage in making more money while putting you at more risk involves using borrowed funds to
increase the potential return on an investment. While leverage can amplify gains if the investment
performs well, it also magnifies losses if the investment goes against expectations. This increased risk
stems from the fact that borrowed funds must be repaid regardless of the investment outcome,
potentially leading to significant financial losses.

24. which is the second largest stock exchange in the world?

 The second largest stock exchange in the world is the NASDAQ (based on market capitalization of
listed companies), after the New York Stock Exchange (NYSE).

25. what is money laundering?

Money laundering refers to the illegal process of disguising the origins of money obtained through
criminal activities (such as drug trafficking or corruption) to make it appear legitimate. It involves a
series of transactions or financial activities aimed at concealing the source, ownership, or destination
of illegally obtained money.

26. what is an economic bubble ?

An economic bubble occurs when the prices of assets, such as stocks, real estate, or commodities,
rise significantly and exceed their intrinsic value due to speculation and investor enthusiasm. Bubbles
are characterized by unsustainable rapid price increases, fueled by market optimism and the fear of
missing out (FOMO). When the bubble bursts, asset prices decline sharply, often resulting in
significant financial losses for investors.

27. what is blockchain?

Blockchain is a decentralized digital ledger technology that records transactions across multiple
computers in a way that is secure, transparent, and resistant to modification. Each transaction is
added to a "block" in a chain of blocks, creating a permanent and verifiable record. Blockchain is best
known for its role in supporting cryptocurrencies like Bitcoin but has applications beyond digital
currencies, including supply chain management, voting systems, and decentralized finance (DeFi).