Stock Market is a place where transactions of shares are held. It is a market where buyers and sellers of stocks of different listed public companies come together. This is also known as equity market due to trading transactions are dominantly in common stock trades.
To know more about Stock Market, we must first know some fundamental things to understand more about stock market.
Let’s start with Stocks.
Stocks are known as shares, it is the proof that you are one of the part-owner of the company name printed in that stock. They are evidenced by having a Share Certificate or Stock Certificate. Sample of stock certificate is the Philippine Long Distance Telephone(PLDT) stock illustrated here in. In the stock certificate, it will inform you how many shares of stock you own, sample PLDT stock certificate certifies that 100 shares is own by Sam Sperling & Mrs Leanore Sperling JT Ten. Being a holder of 100 shares means you only own the company in the extent of 100 shares it represent in its outstanding shares of PLDT. Outstanding Shares means all shares that were issued to the public including the shares held by officers of the company. It does not include the shares repurchased by the company, or known as Treasury Shares. To illustrate, if you have 10,000 shares of PLDT and as of the date PLDT have 186,756,670 outstanding shares (data from www.pse.com.ph Aug. 11,2011). Then you owned 0.005355% of Philippine Long Distance Company.
Share stocks are generally classified into two types, the common shares and preferred shares. The difference between the two are, common shares are type of shares that are usually given the right to influence and control the management activities and decision because common share usually have the right to vote on all the company’s matters, and to adverse that influential power is that common shares have no fixed dividend paid out unlike the preferred shares. Preferred shares are equity shares that have the same attributable characteristics as debt instruments because usually preferred shares have fixed dividend rate and are more preferred first than common share in case of company liquidation after liabilities have been paid by sale of the company assets.
For investors, common shares are more preferred due to the power to vote and the capacity to increase or decrease its fair value due to company performance, fundamental and technical analysis through trading in the stock market. Like PLDT shares, which has only 5.00 pesos par value or face value per share but its market value is 2,260.00 pesos per share as of Aug 11, 2011. http://www.pse.com.ph/html/MarketInformation/stockinfo.jsp?securitySymbol=TEL
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Be savy everyone!
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