ABC’s Of World Stock Market
Recently, the topic of finance, stock market and investment features is of increasing interest among the population. This is due to the desire of people to gain financial independence. Anyone who wants to increase their capital will sooner or later face the concept of the stock market, since securities are today the most popular way of investing, which allows you to get a good profit in the shortest possible time. The market is called a “stock market” because many enterprises enter into it in order to attract additional finance through the sale of securities or bonds.
All trades are made on the stock exchange and over-the-counter markets. The stock exchange is a computerized center, which can be accessed via the Internet. In the stock market, orders for the purchase and sale of shares from bidders are being formed. Individuals can access the exchange only through brokers who provide a trading terminal and carry out all financial settlements. For these services, the broker charges commissions from the trader.
Anyone can become a trader today, regardless of profession and education. To do this, you must have a computer with Internet access and some free time. A lot of materials on trading are available on the Internet and therefore you can learn the basics of working in financial markets yourself.
- Shares are securities that allow the holder to receive a part of the profit from the company’s activities (dividends) or to take direct part in the management of the company, in the event that there is a sufficient number of shares. Shares are issued in non-documentary form, that is, they exist only in the form of records from registry-holding organizations.
- The bond is a kind of loan, which is provided by the investor of the company that issued the shares. If an investor purchased a bond of such a company, then, it can be said, he gave her a loan and in due time will receive his interest. Investing in bonds is an analogue of a deposit in a banking organization. The percentage of earnings from this type of investment is often not more than the usual bank interest.
- The derivatives market is represented by futures and options.
- Futures is a contract for the purchase of the underlying asset (usually shares), where the timing in the future is clearly defined at the prices set today. The quantity, quality and details of the underlying asset are clearly defined in the contract specification on the exchange’s website.
- An option is a contract that gives the right to purchase or sell an individual asset at a fixed price within a certain time frame. The option seller, in this case, is obliged to make a return sale or purchase of an asset in accordance with the terms of this financial instrument.