Equity trading enables investors to become partial owners of the organization. When a company issues shares to the investors in return for money, these shares are called equities. The equity meaning in share market is nothing but these shares which investors can buy or sell. The equity market is also called a stock market where traders buy or sell shares. The companies listed on exchanges offer a fraction of their equity to public investors.
It is a trust that collects money from a number of investors who share a common investment objective and invests the same in equities, bonds, money market instruments and/or other securities. And the income / gains generated from this collective investment is distributed proportionately amongst the investors after deducting applicable expenses and levies, by calculating a scheme’s “Net Asset Value” or NAV. Simply put, the money pooled in by a large number of investors is what makes up a Mutual Fund.
IPO stands for Initial Public Offering. Initial Public Offering (IPO) can be defined as the process in which a private company or corporation can become public by selling a portion of its stake to the investors.
An IPO is generally initiated to infuse the new equity capital to the firm, to facilitate easy trading of the existing assets, to raise capital for the future or to monetize the investments made by existing stakeholders.
The institutional investors, high net worth individuals (HNIs) and the public can access the details of the first sale of shares in the prospectus. The prospectus is a lengthy document that lists the details of the proposed offerings.
Once the IPO is done, the shares of the firm are listed and can be traded freely in the open market. The stock exchange imposes a minimum free float on the shares both in absolute terms and as a ratio of the total share capital.
Futures and options are the major types of stock derivatives trading in a share market. These are contracts signed by two parties for trading a stock asset at a predetermined price on a later date. Such contracts try to hedge market risks involved in stock market trading by locking in the price beforehand.
Future and options in the share market are contracts which derive their price from an underlying asset (known as underlying), such as shares, stock market indices, Commodities, ETF , and more. Futures and options basics provide individuals to reduce future risk with their investment through pre-determined prices. However, since a direction of price movements cannot be predicted, it can cause substantial profits or losses if a market prediction is inaccurate. Typically, individuals well versed with the operations of a stock market primarily participate in such trades.
Trading in the currency market always works in pairs and this applies to both buying and selling of the currencies. The value of these trades is determined by the exchange rate, which is the value of a currency with respect to another.
The exact nature of a currency trade is denoted by the appropriate symbols. For instance, INR stands for Indian Rupee, while USD stands for American Dollar. If you were to trade Indian Rupees against American Dollars, the trade would be denoted as such – INR/USD. Similarly, every currency in the world is denoted by three unique letters and the direction of the trade is denoted with a ‘/’ sign.
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