Different Types of Stock and Stock Markets
For a new investor, it is important to know the various types of stocks on the market and the different markets, or different stock markets.
There are two basic types of stocks:
1. Ordinary shares
2. Preferred Stock
Ordinary shares are the "basic stocks" of companies directly affected by fluctuations in the Company's profit or loss. These shares are also distributed to the company's employees. Although high-risk is associated with common stocks, they are also highly profitable instruments because they have no fixed dividends. After the common stock, the preferred stock is assigned to the selected stakeholder. These shares hold a fixed dividend associated with them and are paid periodically to the stakeholders. They may be further subdivided into categories A, B and C with different price, limit and dividend amounts
Preference Shares Shareholders pay dividends before paying their ordinary shareholders' profits. If the company is liquidated for any reason, its preferred stockholders may withdraw their funds, and the common shareholders may not. However, less profit associated with the preferred stock
When the company's stock demand falls substantially, the company issues stock splits. Here, investors can buy twice the value of the stock at the same amount. With the increase in demand, there may be reverse split, which happens to be the opposite of the stock split.
The actual location of the securities transaction is called Stock Exchange ]. There are also two basic stock exchanges:
1. Physical Exchanges: For example, the New York Stock Exchange and AMEX
2. Virtual / online transactions: For example, NASDAQ
The New York Stock Exchange (NYSE) has been operating since 1792. It is located on Wall Street and has strict rules for listing companies. New York Stock Exchange lists large companies such as Coca-Cola, Wal-Mart and General Electric. The New York Stock Exchange is also known as the "auction market"; this is because investors compete for shares on the floor as they do in auctions, and that share goes to the lowest bidder. The NYSE's stock is believed to be volatile and less volatile.
The American Stock Exchange (AMEX) is another major physical exchange operated in Manhattan. The maximum listing fee for the exchange is $ 250,000 and the maximum annual listing fee is $ 50,000. AMEX's core business is Exchange Traded Funds . In 1998, the American Stock Exchange merged with the American Securities Dealers Association (Nasdaq) to become the "NASDAQ – American Stock Exchange Market Group". Compared with the New York Stock Exchange or NASDAQ, the American Stock Exchange has a free listing policy. Some companies listed on the AMEX are B & G Food Holding, Otelco, etc.
For Nasdaq, trading is virtual or via an online network. Investors and stock traders trade and interact via the Internet, virtually buying and selling stocks. Therefore, the Nasdaq there is no trading floor. Nasdaq lists "tech giants" such as Microsoft, Cisco and Oracle. It is also referred to as the "dealer market", and the transaction is not through auctions, but through dealings with buyers and sellers. The exchange's maximum listing fee is US $ 150,000 and the maximum annual listing fee is US $ 60,000. Therefore, the stocks listed here are more "growth-oriented"