The share price is the price at which a particular share can be bought or sold. The share Do research on the stock market through regular reading of financial . CHAPTER 2 LITERATURE REVIEW OF STOCK MARKET As the activities on a stock market tend to be specialized and not understood by common people, this. understanding the Different Ways to download and sell stock. The seC's office of Investor A market order is an order to download or sell a stock at the best available price.
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The sooner one starts investing the better. By investing early you allow your investments more time to grow, increases your income, by accumulating the. on the stock market. Over the last few decades, the average person's interest in the stock market has grown exponentially. What was once a toy of the rich has. stocks is called equity capital. Because you can make or lose money through investments, you must determine the amount of money that you can afford to.
Blue Chip Stock: Stocks of large, well-established and financially-sound companies which hold a record of consistently increasing rate of paying the dividends over decades to its stock holders.
Blue chip stocks typically have a market capitalization in thousands of crores. Board Lot: A standard trading unit as defined by the particular exchange board. Board lot size usually depends on the per share price. Common board lot size are 50, , , units. Bonds: It is promissory note issued by companies or government to its downloaders.
It speaks about the specified amount held for a specified time period by the downloader. Book: An electronic record of managing all the pending download and sell orders of particular stocks. But they charge a commission for their service. Bull Market: A market in which the stock price are increasing consistently. Business Day: Monday to Friday, excluding public holidays. Call Option: An option that is given to investor the right but not obligation to download a particular stock at a specified price within a specified time period.
Close Price: The final price at which the stock is traded on a given particular trading day. Commodities: Product used for commerce that are traded on a separate, authorized commodities platform. Commodities include agricultural products and natural resources. Convertible Securities: A security bonds, debentures, preferred stocks by an issuer that can be converted into other securities of that issuer are known as convertible securities.
The conversion usually occurs at the option of the holder, but it may occur at the option of the issuer. Debentures: A type of debt instrument that is not secured by physical assets or collateral. Debentures are backed only by the general creditworthiness and reputation of the issuer. A debenture is an unsecured form of investment. Defensive Stock: A stock that provides a constant dividends and stable earnings even in the periods of economic downturn i. Delta: The ratio that compares the change in the price of the underlying asset to the corresponding change in the price of a derivative.
Sometimes referred to as the hedge ratio. It has a range from 0 to 1.
Derivatives: A security whose price is derived from one or more underlying assets. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Diversification: Reducing the investment risk by downloading shares of different companies operating in different sectors. It is usually declared as a percentage of current share price or some specified INR value, usually decided by the board of directors of the company.
They use monthly data of hundreds of individual stocks listed on the New York Stock Exchange from to , and construct the winner portfolio of 35 best performed stocks in the past 3 years and the loser portfolio of 35 worst performed stocks in the past 3 years. Early investigations of momentum and contrarian effects focused on the US market.
These two anomalies have also been found in other markets later. Chan et al.
Baytas and Cakici report the presence of a long-term contrarian effect in seven non-US markets [ 8 ]. Hameed and Ting find the price reversal in the Malaysian market [ 9 ]. Kang et al. Naughton et al. Additionally, the momentum and contrarian effects have been discovered in the markets of different financial products. Grinblatt et al. Asness et al. The research in Ref.
More and more kinds of momentum or contrarian effects were explored in a body of further studies about market anomalies, which in turn partially explained the presence of momentum and contrarian effects. On the basis of price momentum, various factors containing firm-specific information were taken into consideration.
Investors can construct zero-cost arbitrage portfolios in terms of more information and get higher profits. These factors include firm capitalization [ 3 , 5 ], stock price [ 15 , 16 ], book-to-market ratio [ 17 ], trading volume [ 11 , 18 ], and so on. Moreover, the assets could be divided into portfolios with different styles according to these firm-specific information factors and the momentum or contrarian effect about style portfolio style investing also attracted wide attention as well [ 19 , 20 ].
Studies on specific industrial sectors unveil that the momentum and contrarian effects can obtain much more profits in industrial sectors [ 21 , 22 ].
Note that the results about the momentum and contrarian effects vary with changing market states [ 23 ] and seasonality [ 24 ]. There are also studies on individual stocks and stock market indexes [ 25 ], which is beyond the scope of this work. With the increasing importance of China in the world economy, more and more related researches have been carried out on the Chinese stock market. It has been shown that the Chinese stock market and the US stock market are uncorrelated [ 26 ] and even negatively correlated in some periods [ 10 ].
Compared with other mature financial markets, the data size of the Chinese market is relatively smaller, which may lead to imprecise results. The trading mechanisms of the Chinese market differ from other markets and keep self-improving. In the Chinese market, the majority of investors are retail investors, causing larger irrational and speculative behaviors.
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Tran Thanh Liem. Besides, review of other studies will be done in this chapter to give various dimensions of stock market in an economy.
Stock market is different from a stock exchange, which is an entity a corporation or mutual organization in the business of bringing downloaders and sellers of stock together. Because these men also traded with debts, they could be called the first brokers. In early 13th century Bruges commodity traders gathered inside the house of a man called Van der Beurse, and in they institutionalized this, but Until then informal meeting and become the Brugse Beurse.
The idea quickly spread around Flanders and neighboring counties and Beurzen and soon opened in Ghent and Amsterdam. In the middle of the 13th century, Venetian bankers began to trade in government securities. In , the Venetian government outlawed spreading rumors intended to lower the price of government funds.
Bankers in Pisa, Verona, Genoa and Florence also began trading in government securities during the 14th century. This was only possible because these were independent city states not ruled by a duke but a council of influential citizens.
The Dutch later started joint stock companies, which let shareholders invest in business ventures and get a share of their profits or losses. It was the first company to issue stocks and bonds. The first stock exchange to trade continuously was the Amsterdam Beurs, in the early 17th century. Over time, markets have become more institutionalized with downloaders and sellers largely institutions e.
Now, participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere.
Their orders usually end up with a professional at a stock exchange, who executes the order.
Most stocks are traded on exchanges e. Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. The other type of exchange is a virtual kind e.
Actual trades are based on an auction market paradigm where a potential downloader bids a specific price for a stock and a potential seller asks a specific price for a stock.
When the bid and ask prices match, a sale takes place on a first come first serve basis if there are multiple bidders and askers at a given price. The purpose of a stock exchange is to facilitate the exchange of securities between downloaders and sellers, thus providing a marketplace virtual or real.
Financial markets constitute an important part of the total infrastructure for every society that has passed the stage of largely domestic economies. Stock market which is part of the financial markets, perform the following functions in an economy: Raising Capital for Businesses: The stock exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public II.
Mobilizing Savings for Investment: When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed or kept in idle deposits with banks, are mobilized and redirected to promote business activity with the benefits for several economic sectors such as agriculture, commerce and industry, resulting in a stronger economic growth and higher productivity levels.
Facilitate Company Growth: Companies view acquisitions as opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share or acquire other necessary business assets. A takeover bid or merger agreement through the stock market is the simplest and most common way to company growing by acquisition or fusion. Redistribution of Wealth: By giving a wide spectrum of people a chance to download shares and therefore become part owners shareholders of profitable enterprises, the stock market helps to reduce large income inequalities.
Both casual and professional stock investors through stock price rise and dividends get a chance to share in the profits of promising business that were set up by other people. Corporate Governance: However, some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies e.
Creates Investment Opportunities for Small Investors: As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person downloads the number of shares they can afford. Therefore the stock exchange provides an extra source of income for small savers. Government Raise Capital for Development Projects: The Government and even local municipalities may decide to borrow money in order to finance huge infrastructure projects such as sewerage and water treatment works or housing estates by selling another category of securities known as bonds.
These bonds can be raised through the stock exchange whereby members of the public can download them. When the government or municipal council gets this alternative source of funds, it no longer has the need to overtax the people in order to finance these development projects.
Barometer of the Economy: At the stock exchange, share prices rise and fall depending, largely on the market.