This video discusses various order instructions that are supplied along with an order. The video also explains market orders, limit orders, stop loss orders and other order instructions. In the stock markets buyers and sellers interact with the brokers and the exchange in order to issue and fulfill their orders. At the minimum an order […]
Equity Market Organization and Structure
Margin Trading – Purchasing Stocks on Margin
An investor who wants to take a position in a stock but doesn’t have enough funds can use borrowed funds to purchase the asset. This is called a leveraged position, and the investor is said to be using leverage. One of the ways to use borrowed funds is called margin loan. Let’s look at how […]
Long and Short Positions in Financial Assets
A position in a financial asset refers to the quantity of an asset owned or owed by a person. The two types of positions are long and short position. A person is said to have a long position when he owns the asset. This means that he has paid money to buy that asset. For […]
What is Initial Public Offering (IPO)?
When a company wants to raise money from the public, it does so by approaching investors in the primary market. The process of raising money by issuing new securities to the investors in the primary market is known as Initial Public Offering. Once the security has been issued, investors can trade these securities (buy and […]
Understanding Initial Public Offering with an Example
In the previous article we looked at the process of initial public offering. Let’s now take an example to understand how the maths and numbers in an IPO work. Let’s say that a fictitious company Sound Electronics comes out with an IPO in which it raises $300 million by selling 100 million ordinary shares at […]
What is a Seasoned Security?
When a new stock or a financial instrument is newly issued and starts trading in the secondary market, its price may exhibit substantial volatility in the initial period after which the short-term effects would settle down and the price will become more stable. Once the security has been trading in the secondary market for a […]
What is Private Placement of Shares?
Sometimes the companies issue their securities to a small select group of investors via a private placement. So, instead of opening the issue to the entire public through an IPO, the issue is sold directly to qualified investors using the services of an investment bank. For this reason, such an issue of securities is also […]
What is Shelf Registration?
Shelf registration, also known as shelf offering, is a type of public offering in which a company can use a single prospectus to issue seasoned securities to the public multiple times over a period of many years. The company does not have to have a separate prospectus for each offering. In such a case, the […]
How to Buy a DRIP Stock?
Dividend Reinvestment Plans (DRIPs) are an investment option offered by corporates to its shareholders under which the dividends due to the investors are directly reinvested in the new stocks issued by the corporation. Such a plan is beneficial for long-term investors, as the money gets reinvested immediately and the investor does not have to incur […]
Rights Issue of Shares
Rights issue is yet another way using which companies raise additional capital from the public. In a rights issue, the company offering these rights gives its existing shareholders a right to buy new shares of the company at a discount from its current market price at a specified future date. The right works just like […]