STOCKS WHY ISSUE?
- shows a fraction of To generate fund to
ownership in a corporation provide financing of the
- has legal rights new investors.
- ownership of shares The promoters may simply
has legal documentation that wish to reduce their
specifies the amount of shares. holding, freeing up capital
for their own private use.
STOCK CERTIFICATES - Financial capability to fund
given to stockholders expansion without
incurring any debt.
STOCK MARKET Financing a company
- Equity Market through a sale of stocks
- trades company shares also known as equity
and derivatives at an agreed financing.
price
- no substance market TRADING
(everything is done virtually) - transferable from one
- transaction are well shareholders to another
documented as well as legal - exchange through the
rights stock brokers registered with
the exchange
SHAREHOLDERS
(STOCKHOLDERS) SHARE PRICE
- granted with the DETERMINATION
privileged depending on the - price is strictly a result
class of stock of supply and demand
- shareholders vary AUCTION MARKET
from from individual stock MODEL
investor to a large hedge fund - bidding
trades - the seller will set an
asking price and the buyer will
STAKEHOLDERS - they bid
have something at stake
LISTING
REQUIREMENT LEVERAGE
- the set of rules given STRATEGIES
by a stock exchange (leverage - ability to increase
- requirement may vary the competitive advantage para
from exchange to exchange. hindi na mag incur ng losses)
WAYS OF BUYING AND MARGIN BUYING -
SELLING SHARES buying stocks with money
1. Through a stock broker - borrowed against the stock
they arrange the sale of stock in the same account.
from seller to buyer. (umuutang sa brokers para
[Jollibee *minimum of 10 makabili ng stocks)
shares] SHORT SELLING -
traders borrows stock and
2. Direct from company - with sell it to the market.
minimum one share, the entity (bumibili ng shares pero pag
or individual can purchase tumaas yung value ng shares ay
further to the market. ibenebenta agad)
[ Lesser fee compared to
brokers pero kayo mismo yung WHEN TO INVEST?
mag momonitor ng shares niyo FUNDAMENTAL
unlike ng sa brokers ANALYSIS - analyzing
(intermediries) na may companies by their F.S found
additional fee pero sila na ang in SEC fillings, business trends,
bahala sa shares mo and pwede general economic conditions
din silang maging financial and the growth prospects of
adviser ] company’s market segment.
Parameters:
3. Initial Public Offering Price to Earning Ratio -
(IPO) - purchased directly measures relationship
from the company. between price of the
[ it happens pag yung private ordinary shares in the open
company directly offer shares market and profit earned
to public] on a per share basis.
are high or low on relative
Price to Book Value basis.
Ratio - measures the Oscillators
market value of a
company’s stock against its STOCK MARKET INDEX
book, helping the investor - it captures the
determine whether the movement of prices in a market
stocks are undervalued or or section of a market. Such
overvalued. indices are usually market
Debt to Equity Ratio - capitalization weighted, with
measures debt relative to the weights reflecting the
amounts of resources contribution of the stock to the
provided by owners. index. Examples of index
include Sensex, Nifty, DJIA,
S&P500, Nikkei etc.
-The constituents of the
index are reviewed frequently
to include/exclude stocks in
order to reflect the changing
business environment.
[Hindi company or
organization but rather another
TECHNICAL ANALYSIS - statistical tool or measurement
studies price actions in markets tool that investors use so that
through the use of charts and they can identify the overall
quantitative techniques to help of trends]
attempt to forecast price trends
regardless of the company’s ROLES OF STOCK
financial prospects. MARKET
Raising capital for
Examples: businesses
Trend Line Government capital-raising
Bollinger Bands - helps for development projects
determine whether prices Mobilizing savings for
investment
Facilitating company STOCK MARKET
growth through CRASHES
acquisitions A stock market crash is
Creating investment often defined as a sharp dip in
opportunities for small share prices of equities listed
investors on the stock exchanges. In
Barometer of the economy parallel with various economic
factors, a reason for stock
STOCK MARKET AND market crashes is also due to
FINANCIAL RISKS panic and investing public's
Sometimes the market loss of confidence. Often, stock
seems to react irrationally to market crashes burst
economic or financial news. speculative economic bubbles.
This may 'temporarily' move
financial prices away from their Famous stock market
long term aggregate price crashes have lead to the loss of
'trends'. (Positive or up trends billions of dollars and wealth
are referred to as bull markets; destruction on a massive scale.
negative or down trends are
referred to as bear markets). [Happens if nagkakaron ng
Over-reactions may occur—so dramatic declined sa stock
that excessive optimism prices that can represent or give
(euphoria) may drive prices a significant losses when it
unduly high or excessive comes to paper wealth or
pessimism may drive prices bumababa yung monetary
unduly. supply ng isang economy]
[If bull or bear market happens
constantly stock market crashes
may occur]
