FinanceTurf.com All about Finance!!

Demat account is an account wherein you can hold shares of various companies in the dematerialized [electronic] form.
You can open a demat account with a share brokerage or a bank.

DeMat account

You should necessarily have a PAN card for opening such an account.

You can operate your account by giving the filled in delivery instruction slips provided for selling the shares in your account.

The shares you buy will get credited to your account a few days after you buy.

In India, a demat account, the abbreviation for dematerialized account, is a type of banking account which dematerializes paper-based physical stock shares.

The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a stock broker.

This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a demat account for share trading above 500 shares.

Various benefits for which Demat account is must are:-

• A safe and convenient way to hold securities;

• Immediate transfer of securities;

• No stamp duty on transfer of securities;

• Elimination of risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc.;

DeMat Account

• Reduction in paperwork involved in transfer of securities;

• Reduction in transaction cost;

• No odd lot problem, even one share can be sold;

• Nomination facility;

• Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc.

• Holding investments in equity and debt instruments in a single account.

Do Post Your Comments..

Bombay Stock Exchange

The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia.

It is located at Dalal Street, Mumbai, India.

The Bombay Stock Exchange was established in 1875.

Bombay Stock Exchange

Around 4,800 Indian companies list on the stock exchange.

Do Post Your Comments..

The National Stock Exchange of India Limited (NSE) is a Mumbai-based stock exchange.

National Stock Exchange

The main objective of NSE is to provide a nation wide transparent market for equity, debt and other variation of securities.

It’s the largest stock exchange in India.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries but its ownership and management operate as separate entities.

National Stock Exchange

Vibrant features of NSE are:-

2) Securities traded – The NSE has two segments for trading in securities

a) Capital market segment – equity, debentures and hybrids,

b) Money market segment – T-bills, Cps, CDs, PSU bonds etc.

2) Payment and delivery on the NSE are completed within 15 days of the transactions.

Do Post Your Comments..

Mexico Stock Exchange

A stock exchange, share market or bourse is a corporation or mutual organization which provides facilities for stock brokers and traders, to trade company stocks and other securities.

The Securities Contract (Regulation) Act, 1956 defines a stock exchange as an association, organization or body of individuals, whether incorporated or not, established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.

Every stock exchange has a specific location.

Stock Exchange

Only members who have applied and obtained membership are authorized to trade there.

Brokers serve as intermediaries between the buyers and sellers.
Securities that are traded on the stock exchange are known as listed securities.

Stock exchanges have multiple roles in the economy, this may include the following :-

• Raising capital for businesses

• Mobilizing savings for investment

• Facilitating company growth

• Redistribution of wealth

• Corporate governance

• Creating investment opportunities for small investors

• Government capital-raising for development projects

• Barometer of the economy

Wall Street Stock Exchange

Twenty Major Stock Exchanges in the World are as follows:-

Do Post Your Comments..

This is the practice followed by a company to make preferential allotment of securities to selected persons, who are normally the promoters, etc.

At a price unrelated to the prevailing market price.

The advantage is that funds are obtained at a minimal cost as compared to the public issue or the private placements methods.

But preferential allotments have been sometimes misused by companies.

Currency

Each shareholder has the right to subscribe to the new shares in the portion of shares he already holds.
The shareholder may either accept the offer for himself or assign a part or all of his rights to another.

Such rights are valuable to shareholders as they are at price below the current market price.
The right issue is an inexpensive and convenient way of raising additional capital as compared to the amount already issued.

A rights issue to the existing shareholders is a mandatory requirement.

The issue of additional shares to other parties without giving the existing shareholders the opportunity to subscribe would reduce the existing shareholders’ proportion of the total capital; i.e.it would ‘water’ their equity.

Do Post Your Comments..

Initial Public Offering

Initial public offering, also referred to simply as a "public offering," is the first sale of stock by a private company to the public.

IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO, the issuer may obtain the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.

IPOs

IPOs can be a risky investment.

For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company.

The IPO can be made by 3 methods which are:-

a) Public Issue through Prospectus – raising the capital by issuing a prospectus to inform and attract the investing public.

b) Offer for Sale – offering the new securities to the investing public by the intermediary like underwriters, merchant banking etc.

c) Private Placement – selling of new securities by an intermediary to selected clients at higher price.

When a company lists its shares on a public exchange, it will almost invariably look to issue additional new shares in order to raise extra capital at the same time.
The money paid by investors for the newly-issued shares goes directly to the company (in contrast to a later trade of shares on the exchange, where the money passes between investors).

IPOs

An IPO, therefore, allows a company to tap a wide pool of stock market investors to provide it with large volumes of capital for future growth.
The company is never required to repay the capital, but instead the new shareholders have a right to future profits distributed by the company.

Do Post Your Comments..

Dividends are payments made by a company to its shareholders.

Dividends

When a company earns a profit, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders of the company as a dividend.

Paying dividends is not an expense; rather, it is the division of an asset among shareholders.

Dividends Policy

There are various forms in which the dividends can be paid, some of which are :-

• Cash

Cash dividends (most common) are those paid out in form of cheques. This is the most common method of sharing corporate profits with the shareholders of the company.

• Stock

Stock dividends are those paid out in form of additional stock shares of the issuing corporation, or other corporation. They are usually issued in proportion to shares owned.

• Property

Property dividends or dividends in ‘in kind’ are those paid out in form of assets from the issuing corporation or another corporation. They are relatively rare and most frequently are securities of other companies owned by the issuer.

• Other

Dividends can be used in structured finance. Financial assets with a known market value can be distributed as dividends.

Do Post Your Comments..

Bond is a debt security, similar to a debenture.
When we purchase a bond, we are lending money to a government, municipality, corporation or other entity known as the issuer.

In return for the loan, the issuer promises to pays a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it “matures,” or comes due.

Bond, like debenture, is an acknowledgement of debt issued under the seal of a company and signed by an authorized signatory.

The expression ‘Bond’ has become synonymous with the debt instruments where the rate of interest is not pre-determined. Examples of bonds are Deep Discount Bond, Zero Coupon Bond etc.

Do Post Your Comments..