Market plan funda clear the visulatation in share market and give some brief knowledge of, Summaries of Mathematical finance

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Basics Of Stock Market

By Ronak Nangalia

Sohrab Kothari

Investment & Need of Investment

•^

The money you earn is partly spent and the rest saved formeeting future expenses. Instead of keeping the savings idleyou may like to use savings in order to get return on it in thefuture. This is called Investment.

-^

One needs to invest to^ 1.

earn return on your idle resources

2.^

generate a specified sum of money for a specific goal inlife

3.^

make a provision for an uncertain future

Where to Invest

-^

One may invest in:^ 1.

Physical assets

like real estate, gold/jewellery,

commodities etc

2.^

Financial assets

such as fixed deposits with banks, small

2.^

Financial assets

such as fixed deposits with banks, small

saving instruments with post offices,insurance/provident/pension fund etc or securitiesmarket related instruments like shares, bonds,debentures etc.

Short & Long Term Options

for Investment

-^

Short Term: 1.^

Savings Bank Account

2.^

Money Market or Liquid Funds

3.^

Fixed Deposit with Banks

3.^

Fixed Deposit with Banks

-^

Long Term: 1.^

Post Office Savings

2.^

Public Provident Fund

3.^

Bonds

4.^

Mutual Funds

Why Trade In Stock Market

-^ 1. You do not need a lot of money to start making money, unlike buyingproperty and paying a monthly mortgage. -^ 2. It requires

very minimal tim

e to trade - unlike building a conventional

business

-^

3. It’s

‘fast’ cash

and allows for quick liquidation (You can convert it to cash

easily, unlike selling a property or a business).

-^

4. It’s

easy to learn how to profit from the stock market

.

-^

4. It’s

easy to learn how to profit from the stock market

.

But You need to have your

basics

clear. Unless you do….you will be wasting

your time and loosing money. You need to be

crystal clear

of each and every

aspect of

Investments

, stock options, Stock Trading, Company,

Shares

,

Dividend & Types of Shares, Debentures, Securities,

Mutual Funds

,^ IPO

,

Futures & Options, What does the Share Market consist of? Exchanges,Indices, SEBI , Analysis of Stocks – How to check on what to buy?,

Trading

Terms

(Limit Order, Stop Loss, Put, Call, Booking Profit & Loss, Short & Long), Trading Options – Brokerage Houses etc.

Stock Market System

-^

Primary market

-^

stock market

is a secondary market

-^

trade stock for listed corporations

-^

trade stock for listed corporations

-^

Progressive development of stockmarket

Why Companies need to issue shares toPublic

-^

Most companies are usually started privately by theirpromoter(s). However, the promoters’ capital and theborrowings from banks and financial institutions may not besufficient for setting up or running the business over a long term. So companies invite the public to contribute towardsterm. So companies invite the public to contribute towards the equity and issue shares to individual investors.

-^

The way to invite share capital from the public is through a ‘Public Issue’. Simply stated, a public issue is an offer

to the

public to subscribe to the share capital of a company. Oncethis is done, the company allots shares to the applicants asper the prescribed rules and regulations laid down by SEBI.

Secondary Market

•^

Secondary market refers to a market where securities aretraded after being initially offered to the public in the primarymarket and/or listed on the Stock Exchange. Majority of thetrading is done in the secondary market. Secondary market comprises of equity markets

and

the debt

markets

comprises of equity markets

and

the debt

markets

•^

Difference between Primary and Secondary Market is^

In Primary Market securities are offered to public forsubscription for the purpose of raising capital or fund
Secondary Market is an equity trading venue in whichalready existing/pre-issued securities are traded amonginvestors

.

Types of investors

•^

Speculators

•^

Hedgers

•^

Arbitragers

•^

Arbitragers

Important Jargons

o^

BSE Sensitive Index or SENSEX o^

Bull Market o^

Bear Market o^

Delivery o^

Intraday o^

Dematerialization o^

Long Buy o^

Short SellingShort Selling o^

Stop Loss o^

Portfolio o^

Tick Size o^

Averaging o^

Booking Profit or Loss o^

Crash - Curciuts o^

Right Issue o^

Stock bonus o^

Stock Split