Understand Share Market Basics - Guide for Beginners
The share market, also known as the stock market or equity market, is a platform where publicly-traded companies issue and trade their shares of stock. Here are some basic concepts and terms to help you understand the share market:
- Stock: A stock represents a share in the ownership of a company. When you buy a share of stock, you become a partial owner of the company.
- Stock Exchange: A stock exchange is a market where stocks and other securities are bought and sold. The two main stock exchanges in the United States are the New York Stock Exchange (NYSE) and the Nasdaq.
- Broker: A broker is a person or a firm that buys and sells stocks on behalf of clients. They charge a commission or a fee for their services.
- IPO: An initial public offering (IPO) is when a private company becomes publicly traded by selling its shares to the public for the first time.
- Bull Market: A bull market is a market where stock prices are rising.
- Bear Market: A bear market is a market where stock prices are falling.
- Index: An index is a measure of the performance of a group of stocks. Examples include the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite.
- Dividend: A dividend is a payment made by a company to its shareholders as a portion of its profits.
- Market Capitalization: Market capitalization is the total value of a company's outstanding shares of stock. It is calculated by multiplying the number of outstanding shares by the current market price.
- Volatility: Volatility is the degree of variation of a stock's price over time. A highly volatile stock has large price swings, while a low-volatility stock has smaller price swings.
Understanding these basic concepts and terms will help you to better understand the share market and make more informed investment decisions.
