Stock market fundamentals coverage

The fundamental principles of the stock market

Trading and investing on the stock market represents a good source of earning money, as long as you fully comprehend the fundamentals of the concept. With this in mind, this article will focus on defining concepts, such as stocks, mutual funds, warrants and bonds, but also focus on the core procedures of trading, such as the issuing of stocks, calculating the selling and purchase prices etc.

Stocks are often described as a type of security that showcases ownership in a certain company or corporation, thus representing the owner’s claim on a part of the business’ earnings and assets.
Bonds represent a debt investment, where an investor decides to loan money to a corporate or governmental entity, which in turn, borrows the money for a pre-defined period of time, and uses it to ensure business growth, while giving the investor either a variable, or a fixed interest rate on the funds.
Mutual Funds
Mutual funds are often described as an investment vehicle that consists of numerous funds that have been collected from various investors, and which are used to commonly invest into various securities such as bonds, stocks, and other market instruments. Money managers operate these mutual funds, keep a small commission, and then proceed to produce capital gains for the investors.
Warrants are described as derivatives that confer investors the right to purchase or sell a security, such as equity, at a pre-defined price before it expires. Call warrants are those which confer the right to purchase a security, whereas put warrants confer the right to sell.
The concept of issuing stocks, warrants, bonds and trading options
A company that has reached maturity and has entered the stock market is given the possibility to issue stocks, bonds, trading options and warrants on the primary market, which are then purchased, and in most cases, later sold on the secondary market. From here, investors are free to purchase and sell them as they wish, to generate an increase in capital.

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