Made by

Rajesh pandey

SHARE MARKET FUNDAMENTALS

Share>

 a share or stock is a document issued by a company,

which entitles its holder to be one of the owners of
the company. A share is issued by a company or can
be purchased from the stock market.
 By owning a share you can earn a portion and selling
shares you get capital gain. So, your return is the
dividend plus the capital gain. However, you also run
a risk of making a capital loss if you have sold
the share at a price below your buying price.
Broker>

 How does one trade in shares ?

 Every transaction in the stock exchange is carried out
through licensed members called brokers.
 To trade in shares, you have to approach a broker However,
since most stock exchange brokers deal in very high
volumes, they generally do not entertain small investors.
These brokers have a network of sub-brokers who provide
them with orders.
 The general investors should identify a sub-broker for
regular trading in shares and palce his order for purchase
and sale through the sub-broker. The sub/broker will
transmit the order to his broker who will then execute it .
What are active Shares ?

 Shares in which there are frequent and day-to-

day dealings, as distinguished from partly active
shares in which dealings are not so frequent.
Most shares of leading companies would be
active, particularly those which are sensitive to
economic and political events and are,
therefore, subject to sudden price movements.
Some market analysts would define active
shares as those which are bought and sold at
least three times a week. Easy to buy or sell. 
Mutual funds>

 Mutual funds also offer good investment

opportunities to the investors. Like
all investments, Mutual Funds also carry
certain risks. The investors should compare
the risks and expected yields after
adjustment of tax on various instruments
while taking Mutual Fund
investment decisions. 
Mutual fund continued….

 Mutual Funds are portfolio of stock market shares

and other financial instruments built with funds
collected from (usually) small investors whose
primary concern is security of investment. These
funds are run by government trusts, banks, and now
private financial institutions as well. These funds can
be OPEN – FUNDED or CLOSED – ENDED.
 There are different kinds of mutual funds to cater to
varied investment objectives: Growth Funds, Income
Funds, Balanced Funds, and Liquid Assets Funds, also
known as Money Market Funds.
Asset

 Asset Anything owned by a company which has a market

value. These are: CAPTIAL ASSETS, which are long-term
assets not usually bought or sold; land, building,
equipment, furniture and fixtures, etc.: CURRENT
ASSETS like cash, accounts receivable; manufactured
goods ready to be sold, and other assets which are likely
to be sold within a year; deferred charge, i.e. expenditure
made now for a future date, such as advance rent or
insurance premia; and INTAGIBLE ASSETS, like goodwill,
copyright, trademark, patents, import and export
permits, leases, and distribution rights. See LIABILITY.
What is NET ASSET VALUE ?

 The Term Net Asset Value (NAV) is used by

investment companies to measure net
assets. It is calculated by subtracting
liabilities from the value of a fund's securities
and other items of value and dividing this by
the number of outstanding shares.Net asset
value is popularly used in newspaper mutual
fund tables to designate the price per share
for the fund.
Different kind of
investments
 Life Insurance
Life Insurance policies are another kind of investment that is fairly popular.
It is a way to ensure income for your family when you die. It allows you a
sense of security and provides a valuable tax deduction.
 Stocks
Stocks are a unique kind of investment because they allow you to take
partial ownership in a company. Because of this, the returns are potentially
bigger and they have a history of being a wise way to invest your money.
 Bonds
A bond is basically a promise note from the government or a private
company. You agree to give them a set amount of money as a loan and
they keep it for a set number of years with a predetermined amount of
interest. This is typically a safe bet and one that is a good investment for a
first time investor because there is little risk of losing your money.
Continued…….

 Mutual Funds
Mutual funds are a kind of investment that are based
on the gains and losses of a shareholder. Basically
one person manages the money of several or many
investors and invests in a list of various stocks to
lessen the effect of any losses that may occur.
 Money Market Funds
A good short-term investment is a Money Market
Fund. With this kind of investment you can earn
interest as an independent shareholder.
Continued…….

 Annuities
If you are interested in tax-deferred income, then
annuities may be the right kind of investment for you.
This is an agreement between you and the insurer. It
works to produce income for you and protect your
earning potential.
 Brokered Certificates of Deposit (CDs)
CDs are a kind of investment where you deposit money
for a set amount of time. The good thing about CDs is that
you can take the money out at any time without paying a
penalty fee. We all know life isn't predictable, so this is a
nice feature to have in your option.
Continued…….

 Real Estate
Real Estate is a tangible kind of investment. It
includes your land and anything permanently
attached to your piece of property. This may
include your home, rental properties, your
company or empty pieces of land. Real estate is
typically a smart and can make you a lot of
money over time
dividends

 Dividends are payments made by companies to

their stockholders in order to share a portion of
the profits from a particular quarter or year.
 How often dividends are paid can vary from one
company to the next, but in general they are paid
whenever the company reports a profit. Since
most companies are required to report their
profits or losses quarterly, this means that most
of them have the potential to pay dividends up to
four times each year. 
Why dividends are paid?

 Dividends are paid by companies as a

method of sharing their profitable times with
the stockholders that have faith in the
company, as well as a way of luring other
investors into purchasing stock in the
company that is paying the dividends.
Amortization
debentures

  A debenture holder is creditor to the company who loans

funds for a period of 7 -10 years against a fixed rate of
interest. After the stipulated loan period the debentures
are redeemed, i.e., the loan is paid back, sometimes with
a very small premium. Debentures are generally secured
against the company’s assets. Convertible debentures
can be either fully or partly converted into a certain
number of shares, usually at a premium, after a stated
period of time. Convertible debentures may carry a lower
rate of interest than non-convertible debentures which
are redeemed after the stated period.
Earning per share

 One of the most widely used indicators of the

worth of a share. It shows what a company
has earned for each of its shares. it is a ratio
calculated b dividing the net profit after tax
(PAT) by the number of equity shares of a
company, which include any shares the
company is committed to issuing, but has not
yet issued, such as those arising out of
conversion of debentures.
Financial institution

 Money management company or corporation which collects

funds from the public and invests or lends to borrowers. These
are of two types: those which do not accept deposits but sell a
product, such as life insurance policies or units in a unit trust
or shares in mutual funds; other which accepts deposits from
the public for a fixed periodic return. The money that is
collected by either is invested in company stocks, bonds,
short term money market instruments, real estate, and other
profitable operations. Some of these institutions have very
large funds and can influence stock prices considerably. They
are the largest players of the stock market with honest
money.