What is Share Market and How Does It Work? Hi, In this post, we will discuss what a share market is and how it works Most people are interested in the stock market, but they have a little fear and a little bit of confusion because they don’t have any idea about it.
Key Points
So let’s have a look at my article. I think after reading my article you get a basic idea about what the stock market is and how the market is in India.
for example, all start with a company lets imagine an XYZ company is good performing in their sector the company owner discussed to expand their business but they won’t have much money to invest in a new venture the biggest source to raise funds is to borrow money from banks and issued bonds but they want to pay interest that increases debt to the company along with an interest but the only way to raise their capital without paying interest is issuing shares to the public and the answer is public.
How it works
The company issues a little bit of ownership to the public, and here begins the company in the stock market. A stock market is a place where the company presents their ownership to the public in the form of stocks, and the major people ask why we want to buy the stocks of the company. The answer is that it totally depends on the company’s revenue, profits, sales, earnings, etc. If the people think the company is able to perform well in the future, then they will buy the stocks of the company and take a portion of ownership of the company. The company is able to pool the capital or money for a new venture.
I tell about how real owners or promoters issue their share and the promoters keep some portion of ownership in their hands, for example, in an understandable and simple way.
The company’s total shares are 10000; they will issue only 7000 shares to the public; the remaining 3000 shares will keep us as promoter shares; 70% of the shares will be issued as a portion of raising funds from the public; the promoter shares are 30% of the company; and the total shares issued to the public are 7000 Each share value is ex 100, and the company receives the money: 7000* 100 = 700,000.
The total market capitalization is 1000000, including promotors shares. Now that the company is structured and planned to issue the shares, when it enters the stock market for the first time, it has to provide an offering price for the shares This is called an IPO (initial public offering) and is a primary market. After selling all shares, the company goes into the secondary market, where the public exchanges their ownership of a company based on their performance. Stock market summary: Stock: in general, the stock has defined the ownership of any company. As you buy more shares of a company, it may increase the ownership of the company. Shares and equity are the same thing.
Stock market
A stock market is a place and platform where buyers and sellers trade their shares to the public and where the company receives the money from the public through exchanges and stockbrokers. In general, a stock market splits into two similar sections related to the stock market: the primary market and the secondary market.
Primary market
In the primary market, a company enters the stock market by issuing shares to the public in a first-time initial public offering. In the primary market, there is only one buyer who is directly purchasing a share from the company.
Secondary market
The secondary market is a place where buyers and sellers exchange ownership based on a company’s past and future performance.
Market capitalization and market cap
Are both the same word. They refer to the total share of the company and the market value of the shares and multiples The share’s value minus the total market price of the share will define.
Initial public offering
The IPO is the first time the stock of a company is offered to the public. Most of the IPOs are young, and smaller companies will issue the shares to raise funds Happy Investing.
