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Elias
JOIN IN THE RISING RALLY
OF STOCK MARKET
Presented by
AKM. Elias Hussain
Member, Executive Committee
BSTD
Elias
???
To join the stock market ?
Elias
Investment Earnings
We have the traditional
knowledge to engage in
transactions with banks and not
beyond, though capital markets
returns are higher than the
interest rates offered by the
banks.
Elias
Stock Market
The stock market may work very
nice unlike others of the globe, if
massive publicity and social
mobilisation campaign is
oriented at a large to incorporate
practical knowledge of the stock
market.
Elias
What About Stocks
The stock market is the core of economic system
– Stock is a share of ownership in the assets
and earnings of a company
– Bond is a type of debt that a company issues
to investors for a specified amount of time.
– Stock market is a general term used to
describe all transactions involving the buying
and selling of stocks and bonds issued by a
company
Elias
Contd.,
Trading is the process of buying and
selling of financial instruments
Stock market is the market for the
trading
one of the most important sources for
companies to raise money
allows businesses to go public, or
raise additional capital for expansion
Elias
Why Company Issue stocks ?
When a company would like to grow, it
issues stocks to raise funds and pay for
ongoing business activities.
It is popular because:
• – The company does not have to repay the
money
• – Paying dividends is optional. Dividends
are distributions of earnings paid to
stockholders
Elias
2 Basic Types of
Stock
Common Stock
Vs.
Preferred Stock
Elias
Common Stock
Common stock – shares or units of
ownership in a public corporation
– Most basic form of ownership
– One vote per share owned to determine
company’s board of directors
• Ways the stock value can change
– The dollar value increases or decreases
– Stock split occurs – shares owned by existing
stockholders are divided into a larger number of shares
such as A merger of two companies and Dividends are
paid
Elias
Preferred Stock
• Preferred stock – shares which pay
fixed dividends and have priority over
common stock
– Less risk than common stock
– No voting rights
– Dividends are stated as a percentage known
as the par value
• Fixed value stated on the stock
certificate
Elias
Stock Classification
• A variety of type of stocks are
necessary for a diversified portfolio
• Seven basic classifications
– Growth, Income, Value, Cyclical,
Countercyclical, Speculative, Blue Chip
• Some stocks can be classified into
more than one category
Elias
Growth Stock
• Growth stocks are from companies who
have a consistent record of relatively
rapid growth and earnings in all
economic conditions
– New companies expending product lines
– Usually does not pay dividends
– Beta is 1.5 or higher
– Examples include Coca-Cola
Elias
Income Stock
• Income stocks pay higher than
average dividends
– Company only retains small portion of
profits
– Companies with a steady stream of
income such as utility companies
– Beta is less than 1.0
Elias
Value Stock
• Value stocks are from companies
which have a low market price
considering historical earning records
and value of assets
– Viewed as investment bargains
– Previous examples are Time Warner
and IBM
Elias
Cyclical Stock
• Cyclical stocks are influenced by
changes in the economic business
cycle
– Companies which operate in major
consumer dependent industries
•Automobiles, housing, airlines
– Beta is generally 1.0
Elias
Countercyclical Stock
• Countercyclical stocks are companies which
give consistent returns even when the
economy is suffering
– Products are always in demand
– Good for investors who want dividends
– Examples are utility companies and
grocery stores
– Beta is 1.0 or below, even negative
Elias
Speculative Stock
• Speculative stocks are companies with
potential for substantial earnings
– Very high risk stocks
– Examples include internet and video
game companies
– Beta is 2.0
Elias
Blue-chip Stock
• Blue-chip stocks are from nationally
recognized companies with long
records of profit, dividend payments,
and a good reputation for management
– Less risky
– Grow at a consistent rate
– Examples are McDonalds, Wal-Mart
and General Electric
Elias
Purchasing Stock
Elias
Brokers
• A Broker is a person who is licensed to
buy and sell stocks, provide investment
advice, and collect a commission on
each purchase or sale
– Purchases stocks on an organized
exchange (stock market)
– Over ¾ of all stocks are bought and
sold on an organized exchange
Elias
Organized Exchanges
• Minimum requirements for a stock to
ensure only reputable companies are
used
• Each exchange has a limited number of
seats available which brokerage firms
purchase to give them the legal right to
buy and sell stocks on the exchange
Elias
Supply vs. Demand
• The stock exchange is organized based upon
the laws of supply and demand
---Supply is the relationship of prices to the quantities
of a good or service sellers are willing to offer for
sale at any given point in time
---Demand is the relationship of prices to the quantities
and the corresponding quantities of a good or
service buyers are willing to purchase at any given
point in time.
Elias
Researching a Stock
For purchasing
Elias
Book Value
Book value is the net worth of a company
Assets- Liabilities = Book value
Information can be found in the company’s annual
report
Elias
Earnings per Share
How much income a company has available to
pay in dividends and reinvest as retained
earnings on a per share basis
After tax annual earnings
Total number of shares of common stock
= Earnings per share
Elias
Price/Earnings Ratio
Price/earnings ratio is the relationship between
the price of one share of stock and the annual
earnings of the company (P/E ratio)
Price per share = P/E ratio
Earnings per share of stock
Elias
Beta
Beta measures a stocks volatility compared
to overall changes in the stock market
If a stock has a beta of +1.5 and the
market went up 10%, the value of the
stock is expected to rise 15%
A higher beta indicates more risk because
the stock price change will be more
Elias
Thank you very much
AKM. Elias Hussain
akmeliashussain@live.com

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Presentation on stock market

  • 1. Elias JOIN IN THE RISING RALLY OF STOCK MARKET Presented by AKM. Elias Hussain Member, Executive Committee BSTD
  • 2. Elias ??? To join the stock market ?
  • 3. Elias Investment Earnings We have the traditional knowledge to engage in transactions with banks and not beyond, though capital markets returns are higher than the interest rates offered by the banks.
  • 4. Elias Stock Market The stock market may work very nice unlike others of the globe, if massive publicity and social mobilisation campaign is oriented at a large to incorporate practical knowledge of the stock market.
  • 5. Elias What About Stocks The stock market is the core of economic system – Stock is a share of ownership in the assets and earnings of a company – Bond is a type of debt that a company issues to investors for a specified amount of time. – Stock market is a general term used to describe all transactions involving the buying and selling of stocks and bonds issued by a company
  • 6. Elias Contd., Trading is the process of buying and selling of financial instruments Stock market is the market for the trading one of the most important sources for companies to raise money allows businesses to go public, or raise additional capital for expansion
  • 7. Elias Why Company Issue stocks ? When a company would like to grow, it issues stocks to raise funds and pay for ongoing business activities. It is popular because: • – The company does not have to repay the money • – Paying dividends is optional. Dividends are distributions of earnings paid to stockholders
  • 8. Elias 2 Basic Types of Stock Common Stock Vs. Preferred Stock
  • 9. Elias Common Stock Common stock – shares or units of ownership in a public corporation – Most basic form of ownership – One vote per share owned to determine company’s board of directors • Ways the stock value can change – The dollar value increases or decreases – Stock split occurs – shares owned by existing stockholders are divided into a larger number of shares such as A merger of two companies and Dividends are paid
  • 10. Elias Preferred Stock • Preferred stock – shares which pay fixed dividends and have priority over common stock – Less risk than common stock – No voting rights – Dividends are stated as a percentage known as the par value • Fixed value stated on the stock certificate
  • 11. Elias Stock Classification • A variety of type of stocks are necessary for a diversified portfolio • Seven basic classifications – Growth, Income, Value, Cyclical, Countercyclical, Speculative, Blue Chip • Some stocks can be classified into more than one category
  • 12. Elias Growth Stock • Growth stocks are from companies who have a consistent record of relatively rapid growth and earnings in all economic conditions – New companies expending product lines – Usually does not pay dividends – Beta is 1.5 or higher – Examples include Coca-Cola
  • 13. Elias Income Stock • Income stocks pay higher than average dividends – Company only retains small portion of profits – Companies with a steady stream of income such as utility companies – Beta is less than 1.0
  • 14. Elias Value Stock • Value stocks are from companies which have a low market price considering historical earning records and value of assets – Viewed as investment bargains – Previous examples are Time Warner and IBM
  • 15. Elias Cyclical Stock • Cyclical stocks are influenced by changes in the economic business cycle – Companies which operate in major consumer dependent industries •Automobiles, housing, airlines – Beta is generally 1.0
  • 16. Elias Countercyclical Stock • Countercyclical stocks are companies which give consistent returns even when the economy is suffering – Products are always in demand – Good for investors who want dividends – Examples are utility companies and grocery stores – Beta is 1.0 or below, even negative
  • 17. Elias Speculative Stock • Speculative stocks are companies with potential for substantial earnings – Very high risk stocks – Examples include internet and video game companies – Beta is 2.0
  • 18. Elias Blue-chip Stock • Blue-chip stocks are from nationally recognized companies with long records of profit, dividend payments, and a good reputation for management – Less risky – Grow at a consistent rate – Examples are McDonalds, Wal-Mart and General Electric
  • 20. Elias Brokers • A Broker is a person who is licensed to buy and sell stocks, provide investment advice, and collect a commission on each purchase or sale – Purchases stocks on an organized exchange (stock market) – Over ¾ of all stocks are bought and sold on an organized exchange
  • 21. Elias Organized Exchanges • Minimum requirements for a stock to ensure only reputable companies are used • Each exchange has a limited number of seats available which brokerage firms purchase to give them the legal right to buy and sell stocks on the exchange
  • 22. Elias Supply vs. Demand • The stock exchange is organized based upon the laws of supply and demand ---Supply is the relationship of prices to the quantities of a good or service sellers are willing to offer for sale at any given point in time ---Demand is the relationship of prices to the quantities and the corresponding quantities of a good or service buyers are willing to purchase at any given point in time.
  • 24. Elias Book Value Book value is the net worth of a company Assets- Liabilities = Book value Information can be found in the company’s annual report
  • 25. Elias Earnings per Share How much income a company has available to pay in dividends and reinvest as retained earnings on a per share basis After tax annual earnings Total number of shares of common stock = Earnings per share
  • 26. Elias Price/Earnings Ratio Price/earnings ratio is the relationship between the price of one share of stock and the annual earnings of the company (P/E ratio) Price per share = P/E ratio Earnings per share of stock
  • 27. Elias Beta Beta measures a stocks volatility compared to overall changes in the stock market If a stock has a beta of +1.5 and the market went up 10%, the value of the stock is expected to rise 15% A higher beta indicates more risk because the stock price change will be more
  • 28. Elias Thank you very much AKM. Elias Hussain akmeliashussain@live.com