Frequently Asked Questions about Stock for Beginner

Stocks FAQ
Stocks FAQ

A stock is one of the types of equity securities that provide the owner with the right to receive part of the net profit from the activities of the joint-stock company (dividends) or part of the company’s property upon its liquidation. Legal entities issue the shares. Individuals do not have the right to create and distribute securities of this type.

FAQ about Stock

How to choose stocks to buy?

You can choose stocks based on several approaches. If we are talking about speculation, then the trader will be interested in the most liquid instruments. That can be bought and sold at any second. In addition, these should be sufficiently volatile assets so that in a relatively short period of time they show good dynamics of growth or decline.

If an investor is looking for long-term investments, then dividend yield and long-term growth prospects come to the fore. It is best to buy such securities after expressed corrections, using weekly or daily charts to find an entry point.

What are blue chips Stock?

“Blue Chips” refers to the most liquid stock market stocks that are in high demand among traders. At the US stock exchange, Apple, Intel Corp, Coca-Cola, McDonald’s are at the top-end. Depending on the region, the names of the shares will vary. The very name ” Blue Chips ” came to the stock market from a casino. Blue chips have the highest value in the game.

What do you need to buy Stock?

You need to register with a broker. Replenish your account. Install a trading terminal on your computer (a special program from the broker). Select one necessary share there. Indicate the volume and buy. In the same terminal, you can sell them.

Where are purchased shares stored?

The shares acquired by the investor are held by the depository. Depending on the storage conditions, this service may be provided on a paid or free basis. An investor can request to withdraw securities to an external depository. If the shares went to a person through work or a relationship with an enterprise, then to sell them, they must first withdraw them from the registrar to the broker’s depository and only then sell them.

What is a depository?

The depository is a database of shareholders. Today, after the purchase of shares, you do not receive paper certificates; instead, you receive an entry in the depository and shareholders registers that you own a certain amount of securities of this issuer. Not only by the companies use the data themselves but also exchanges use the data to control the value of securities and regulate the market.

What is a Stock quote?

A quote is the value of a security at the moment.

Who is the issuer?

A legal entity that develops, registers and sells securities to finance its activities. Issuers may be commercial companies, corporations, investment trusts, national or foreign governments. An issuer is a company that issued shares.

What are dividends?

Dividends are the accrued share of a company’s profit to its shareholders based on the results of a fiscal year or quarter.

How to receive dividends?

To receive dividend income, the investor must be the owner of the shares at the time the registry is closed. This date is different for each company. Due to the specifics of trading on the exchange, the owner becomes the actual owner only on the 2nd day after the transaction. Thus, the investor must buy the paper two days before the cut-off date. In order not to worry and probably get dividends, a deal can be completed in a week. So that there is a margin of time.

What is T + 2?

T + 2 is an internationally accepted form of asset delivery on the stock exchange. When concluding a deal today, physically the instrument will appear on the investor’s account in only two days. However, settlement of the transaction will take place regardless of this factor. To buy or sell the same stock several times, you do not need to wait two days each time. Profit or loss is recorded immediately after the position is closed.

What is the emission?

This is the legislatively approved scheme of actions of the issuer for the placement of securities. In fact it is the issue of securities and calculation of their value.

What is an IPO?

An IPO is an initial public offering of shares by a company. Ther are 2 types of the stock market, primary and secondary. The seller is the issuing company in the primary market. In the case of GAZPROM, it will be GAZPROM OJSC. Buyers are private investors and legal entities.

After the placement, the shares of GAZPROM begin to circulate between the ordinary participants of the exchange. This is called the aftermarket. Those shares that can be seen on the market every day are traded on the secondary market. That is, when buying shares of Rosneft, you do not purchase them from the oil company itself, but from an anonymous counterparty.

Placing papers on IPO, the organizing company, as a rule, plans to earn money, so it sells shares at an extremely high price. Only in rare exceptions do paper continue to grow after initial floatation

How much money do you need to buy Stock?

It all depends on the value of the shares themselves. For example, Microsoft’s share cost- $ 73. Out of more than 10 thousand shares in the international market. There is a wide range of prices from a few dollars to several thousand. For the amount of $ 500-1000, you can buy one share of 10-15 companies by collecting your portfolio

What are depository receipts?

Such a tool has been created so that investors in other countries can also trade in shares of companies that are registered abroad. Owning such a paper, its holder has the right to receive all the privileges that are due to him as a nominal holder of shares

Such a tool is for investors in other countries so that they also trade in shares of companies that are registered abroad. For example, in London, American-type receipts ( ADRs ) for Russian shares are being circulated. Bidders in the UK are free to trade these securities. They are nominated in local currency. But their rate itself does not differ from the value of its underlying asset.

What time can I buy Stock?

The process of buying shares takes place at the moment when the exchanges are open and working, although the broker can be instructed at any time. The New York Stock Exchange trades in shares during the day, from 9:00 to 16:00 New York time. The operating hours of the exchanges are approximately the same for everyone, in the interval from 8 am to 7 pm

What is the minimum amount you can buy shares?

The minimum amount is limited only by the price of the shares themselves, which changes every day. For example, Microsoft and Tesla shares cost between $ 45 and $ 700, respectively.

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