13. What is a Stock?
August 20th, 2010 | by admin |savingandinvesting asked:
Everyone should know what a stock and a bond are - this video gives a quick intro to that. What stocks and bonds are has a lot to do with how providers of capital interact with users of capital (through equity (which includes stocks for many large companies) and debt (which includes bonds for many large users of capital).
Aaron
No Responses to “13. What is a Stock?”
By StocksAdvice on Aug 21, 2010 | Reply
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By savingandinvesting on Aug 24, 2010 | Reply
@geekaleek I would start with the videos in sequence - before stocks for example there is a video on providers and users of capital - there is also the book - I hope this helps - best regards, Michael.
By geekaleek on Aug 25, 2010 | Reply
im still confused
By savingandinvesting on Aug 28, 2010 | Reply
In your hpothetical example, if you sell the stock at $2.50 the profit will be $.5 per stock less any commissions, taxes and other costs. If you do not sell it, it is a paper profit and could obviously disappear. Picking stocks that go up 25% in a day is unfortunately not easy - in fact it is virtually impossible to do consistently (otherwise more active mutual funds would beat their benchmarks). The stock could also go down 25% on the first day or up 2% or down 5% etc.
By BIGKILI808 on Aug 29, 2010 | Reply
hey, how do i get started with buying stocks? i have always heard about people talking about stocks but never knew how it works. can anyone help me?
By assphincter on Aug 30, 2010 | Reply
You earned 25% profit which equals $2500 for a total of $12,500. First time?
By jasonextreme on Sep 1, 2010 | Reply
I need to clarify things.
Okay, so say I have $10000 all spent on a $2 stock.
The next day, the stock goes up and becomes $2.5 which is 25%.
How much profit did I earn?
By 86rishabh on Sep 1, 2010 | Reply
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By shihui1402 on Sep 2, 2010 | Reply
hi , got a couple of qns grateful for your help. 1. why do bonds and interest rates have an inverse relationship, ie bonds go up int rates go down? and in today’s context does this still hold true all the time? 2. pls explain how does the above relationship then relate with equity? 3. pls explain what does a stock split mean? tks again!
By tenchi77 on Sep 2, 2010 | Reply
Subsequent offerings does dilute the value of existing stock holders. It’s unfortunate but sometimes a company will have to do that so that they can raise the necessary cash for the business.
By MarkKing1979 on Sep 4, 2010 | Reply
great info. Thanks!
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By PrinceMansur on Sep 7, 2010 | Reply
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By TheSheik154 on Sep 7, 2010 | Reply
Thanks again ( :
By savingandinvesting on Sep 9, 2010 | Reply
Depends on nature of the secondary issue and what is done with proceeds. If earnings rise proportionately with higher number of shares -> no earnings dilution; if they rise more then deal is actually accretive to earnings. If they rise less then dilutive. Sometimes dilutive in Yr 1 - accretive later. If value of co does not rise proportionately, then value dilution. If the shares are just issued to mgmt at no cost, then dilution but salary and bonus also decrease earnings. Situation specific.
By TheSheik154 on Sep 10, 2010 | Reply
Pardon my (further) ignorance… after an intitial offering, do subsequent offerings dilute the value of existing stocks? And if so, isn’t this unfair to existing stockholders?
By savingandinvesting on Sep 12, 2010 | Reply
First/more dif decision: co (with bankers) establish reasonable market value of the entire eq of co where feel investors will buy eq/shares based on val measures/comparables.
Nr of shares & initial share price range then effectively arbitrary - can pick a nr of shares and calculate a corr price/share. Typ marketed to investors with eq/share price range - allows investors to assess valuation, make calcs, have view.
Based on demand shares priced typ within range, sometimes outside dep. on demand.
By TheSheik154 on Sep 12, 2010 | Reply
Pardon my ignorance here, but what determines the number and/or value of shares that companies can issue in an initial offering?
By Customwatcher6 on Sep 13, 2010 | Reply
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By savingandinvesting on Sep 16, 2010 | Reply
Franchisee adopts philosophy of co. and typ. enters into contract to market part. co’s products/services in certain region only - e.g. a Subway sandwich franchisee - can involve use of logo/way of doing business as per franchise contract.
Investor provides capital/money to entire co. typ. no operational involvement and receives return/loss based on how company develops. Investor either via ownership/equity (shareholder) or through debt (lender). See Provider and User video as well. Best regards.
By sodr2 on Sep 16, 2010 | Reply
so whats the difference between a franchisee and an investor of a company?