Common queries on the share market or stock market

What is stock trading?

Stock trading is the process of buying, selling, and holding the shares of companies that are operating as public companies and is listed in the national stock exchanges. 證券行開 has become easy with the digital applications. Now, anyone can buy and sell the shares of the companies at ease by sitting in their homes. Once you buy a stock of a company, you will own a part of that company proportionate to the size of your holdings. Some companies will provide you dividends from their profits.

What is a spread in stock market trading?

There will be a buy bid and a sell bid for every trade in the stock market. The price at which the seller is willing to provide his shares is a sell bid and that at which the buyer is looking for the shares is a buy bid. The spread is the value of the difference between these two.

What does margin funding mean?

You could not say that you will have the required money all the time an IPO arrives in the market. At times, there may be some insufficiencies. At these times, you could use the option of margin funding to get the IPO even with the shortage of funds. If you opt for margin funding, the brokerage in which you are about to buy the shares will take the responsibility of providing you the remaining funds required to purchase at the moment. So, you will get the shares even with little money. Next, you would have to wait and see the fluctuations. Once you feel it is better to sell the shares, you could do so. But you would have to repay the borrowed amount to the brokerage. If you are at a loss also, you should pay them the original amount. For safety purposes, you would have to maintain the margin amount that you have deposited with the brokerage before the transaction. People who look to make some quick money with limited funds will go for this risky business.

What does the rights issue mean?

There will be tons of companies out there in the stock market with thousands of shareholders. There could be some occasions where any of these companies require some capital at the moment. At these times, there will be several procedures to carry out if they decide to issue a new set of shares to the public as a successive IPO. So, they could think of a rights issue wherein the shareholders of the company will buy some more new shares at a price lower than the current market value. The company will issue these new shares to its shareholders at such a low price only once as there is an urgent need for money. So, it acts as a beneficial act for the shareholders. The drawback of the rights issue for newbies is that they could not involve in the process as it is especially for existing shareholders.

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