Equities are one of the attractive investment avenues that an investor has an option to invest his/ her hard earned money. Equities provide huge returns. These returns are sometimes very high. But with these high returns the equities market is very risky and technical. It requires risk and return trade-off.
There are so many terms related to the equities that you need to know as an investors that will help and guide in stint with the investments in equities. These terms will you to understand the terminology of equity investments and market terms. These are as below:
Capital Gain (Loss): Capital gain or loss refers to the increase or decrease in the value of the shares. This is arrived at by getting the difference between the current value of the investment and invested money.
Consultation Fee: This is fee that is charged by the financial adviser upfront for rendering the consultation services. This has nothing to do with the broker or brokerage or stock exchanges.
Delivery: Delivery refers to the actual handing over of the shares certificates to the investors after any trade; sales or purchase that is duly signed and witnessed.
Dividend: Dividend is the portion of the profit that is shared with the investors of the company. This is usually declared in percentage of the face value.
Primary Market: Primary market is the market where the shares of a company that issues its shares first time to public through initial public offerings, are bought and sold.
Face Value or Par Value: Face value of equity refers to the nominal value printed on the face of a share. This is also known as par value. Par value or the face value may be more or less than the market value of the share. In Indian market the face value of the shares are usually found to Rs. 10. Sometime face value is also found to be Rs. 5 or Rs. 2 or Rs. 1 as well.
Further Public Offering: A listed company may be offering shares in the primary market. The investors have options to buy from here.
Intra-Day trading or Short Selling: This is trading technique or method where stock traders sell the stocks to buy back later on the same day with expectations of prices to fall by the evening and earn profit.
Institutional Investors: These are the investors which are either business house engaged in the activities of investments or banks, mutual funds etc.
Initial Public Offering (IPO): When a company issues its share for the first time, the issue is called the initial public offering.
Market Value: This is value at which the share is available in the market for trade. The traders can either buy or sell on this price only.
Offer Price: This is price that is offered by the issuers of the shares to the public in initial public offerings.
Retail Investors: These are the investors who invest in the market on their own capacity. These investors invest their own earned money in market.
Right Issue: Company may be issuing more shares in the market to existing shareholders on the basis of the holdings of the investors.
Stocks or Equities: Stocks or equities refer to the part of ownership in the company. The ownership of a company is divided into a number of equal value and weighted parts. These parts are known as equities or shares.
Short Term Capital Gains Tax: The tax that is applicable on all the capital gains that are earned during a period of less than one year.
Stock Exchanges: Stock exchanges are the market places where the stocks of any company are traded. These are the registered entities that have been allowed by the government and regulator SEBI to act as market place to provide a transparent market for equity trading under the rules and regulations.
SEBI: SEBI or the Security Exchange Board of India is the market regulator that regulates the market and issues rules and guidelines on the behalf of the government. It is an independent body with huge constitutional powers vested by the constitution of India.
Share Broker: These are registered members of the stock exchanges who are authorized to trade the shares on behalf of the investors.
Share Brokerage: These are the fees paid to broker for executing any trade; sales or purchase. This is charged in the percentage of the value of the trade.
Secondary Market: The investor can buy shares from the secondary or stock exchanges of a listed company.