Top 50 Stock Market Questions for Beginner

Stock market questions
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Investing in the stock market can be difficult for beginners. There are many things beginners  need to learn about the stock market. That’s why we are preparing a list of Top 50 stock market questions for beginners. For understanding the basics of the stock market to advance. These questions will help you to know how the stock market works. 

Stock market questions and answers

Stock market is a place where investors can buy and sell stock(share of company) of any company who is listed in stock exchange. when you buy a share that means you are a buy small ownership of that company. As per company growth your stock price also goes up. There you can make profit from the stock market.

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Stock market is a platform where any one can buy and sell stock of any company who is listed in stock market. But you can’t buy and sell directly in the stock market,for this you need a broker and in this broker you will open a demat account. after create demat account you can trade in stock market. Investors buy stock of any company to make a profit but…

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A stock or share is a small piece of ownership in a company. If you Buy stock in any company you are also a small piece of the owner of that company. If the company grows, your share price will be up. As same as if company valuation goes down your share price also goes down. And stock prices go up and down based on various factors like company financial performance, Geopolitical events and Investor sentiment.  Investing in stock can provide lots of opportunities to earn…..

 

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Stock exchange is a platform where securities like stock, bond and financial instruments are bought and sold. Stock exchange allows investors to buy stock publicly of those companies who are listed in stock exchange. And make a good portfolio to earn passive income through dividend.  Some of the largest stock exchanges in the world are New York Stock Exchange (NYSE), NASDAQ, Tokyo stock exchange, and in India National stock exchange (NSE), Bombay stock exchange (BSE) and …

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In the Stock market there are two types of securities that investors can buy and sell; these are Stock and Bonds. Stocks are ownership of a Company where bonds are Debts. When you buy stocks you become a small owner of that company, when you buy a bond you are lending money to the issuer, such as Corporate or government, in exchange of interest payment and repayment of the principal. But when you buy a Bond…

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Investing in the stock market there are various types of benefits investors can receive. One of the prime benefits is the long term capital appreciation. And as per company growth the value of stock will be increased and investors will receive higher return of investment. Another benefit is the  received passive income through dividend. Many companies give dividends to ….

 

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Investing in the stock market also has lots of risk, as a beginner investor you should know about risk management. One of the important risks is loss of capital. If you do not manage your risk you will lose your capital. The value of stock can go down based on company financial performance or any type of event. It can be anything so be aware of this one. Investors may lose small amounts of capital or lose initial investment. 

 

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Before starting investing in the stock market, Beginners should follow some steps.

  • Educate yourself about the basics of the stock market.
  • Set investment goals with your risk management.
  • Open a demat account with any stock broker platform.
  • Research about stocks, companies that will help you make decisions. 
  • Make your first investment with a small amount of capital.

Its risk to investing in the stock market, you should carefully manage your investment and take risk as you can tolerate. 

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Stock broker is a person or a firm that provides services to buy and sell stocks in the stock market. A stock broker also can buy and sell stock on behalf of his client. And for this service stock brokers charge some fee to their clients. There are different brokerage fees for different brokers. We have a list of Top 10 stock brokers in India Check out here..

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Choosing a stock broker is one of the difficult challenges for a beginner investor. Because it’s important to choose the right stock broker to make a good portfolio. There are few key factors to find the right stock broker, such as broker’s reputation and track record, Reviews and feedback from other clients and most important is brokerage charges. You should check the brokerage fee, and you need to check the number of client brokers have. Make sure the broker is registered with SEBI. Apart from this we have a list of Top 10 brokers in India you can check out there. 

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Stock portfolio is a collection of all stocks and other securities in your demat account. 

It is the total value of all stocks investor holding. For making a good stock portfolio you should research about the company and stocks and invest in various industries with different companies for long term investment. There are lots of factors to make a good portfolio these are..

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Diversify your portfolio with different factors. You should research stocks and companies and invest in different industries with different companies, so you will decrease your risk for investing in the stock market. you should carefully choose the stock for investing. Choose the right industries for investing such as technology, healthcare, consumer goods. Investors will choose a mutual fund for investing in the stock market for the long term. Diversity your stock portfolio you should manage your risk.

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Stock’s performance depends on various types of factory such as financial performance of company, Growth percentage compare to previous record,  including company revenue, growth, profit margin, debts, future action, and price to earn ratio (P/E ratio) It’s also important industries trends, Market conditions and upcoming event that may impact the stock performance. Investors have their own research and deep understanding about a company’s fundamental and future growth.

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Stock index is a simple word we can say group of stocks. It tracks changes of selected groups of stocks. Examples of popular stock indexes are S&P 500, Nifty 50, Sensex, bank Nifty etc.. 

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To read a stock chart you need to understand the basics of a stock chart like price action, time frame, and type of chart. Stock chart shows the history of stock price as per your time frame. And you can identify market trends, support and resistance and other technical indicators. The chart can be line,bar or candlestick. Through the chart you can see opening and closing prices, high and low and other data also. 

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Dividends are payments by a company to their shareholders from their profit.  And this will be quarterly or yearly payment. Dividend are can be greate way to generate passive income for investors. The amount of dividend is determined by the company board of directors and it can be based on company financial performance and other factors also. 

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Stock splits happen when a company increases the number of shares into multiple new shares.The purpose of stock splits is to lower the price of per share of that company, and make it more affordable to individual investors to buy shares. Stock splits do not affect the value of stocks which are investors holding. 

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Insider trading informs the buying or selling of a company’s stock individually who have access to non-public information about the company.  The information can be upcoming revenue reports, upcoming events, and other material events that could have an effect on stock value. Insider trading is illegal because it’s giving non- public information to the investor. 

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Economic and political events can have an impact on the stock market. Like if there is a decreased interest rate it can impact the stock value of that company who borrows money with lower rate of interest. Same also if political instability it will decrease investor confidence and here also impact the stock price. It’s important to keep updating these events. It will impact the stock market.

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A stock is an ownership of an individual company. Mutual funds is a group of stocks, bonds and other securities which is managed by professionals. Investing in stock can be risky and you need to give effort with time but if you invest in a mutual fund here professional will manage. You don’t need to give time and effort. If you have time and want to take risk you can go for stock but if you have no time you can go for mutual funds.

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Stock option is a financial contract  given the right to the investor to buy and sell a specific stock at strike price at a certain time frame, Stock option expires on the last Thursday of every month. Same also stock option weekly expire on thursday. Investors should know about the expiry date. On the expiry day your stock value is going to be zero if stock is out of the money.

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Stock market bubble is a situation in which the stock price will rise unrealistic. This will happen when investors are overly confident about the future and start buying large quantities of stock in a particular sector.  The bubble burst means the stock price suddenly breaks down, it’s also known as a market crash. This will happen when investors start selling their stock with larger quantities. It’s important that the investor should update every situation. 

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Beer market is that simple when the stock price drops more than 20%. In the beer market investor confidence is low, and selling pressure  is more than buying pressure. After that, it’s showing a down trend in the stock market. In the Beer market investors may choose to sell to minimise their loss, but there is also an opportunity for investors to buy stock at a low price. 

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When the stock price goes up 20% or more than 20% that time is a bull market. In this period investor confidence will be high and they will start buying large quantities of stocks. Here buying pressure is more than selling pressure. And it’s also known as the Up trend market. Bull markets depend on positive economic indicators like GDP growth, low interest rate, low unemployment etc.

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Limit order is that type of order placed to buy and sell stock with a set the limit price. That means when the stock price will touch your limit price then your order will execute automatic.Here investors instruct their broker to buy stock with a certain price. As same also for selling investors instruct the broker to sell stock with a certain price. The order does not affect until you touch the limit price. 

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Market order is the type of order to buy and sell stock at current price in the market at the time of order placed. Market price orders are used when investors want to buy and sell stock quickly and ready to accept the current market price.  Market order will be risky in a volatility market. The price may increase at the time of order execution. Which may be a different price the investor saw at the time of executing the order. 

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Short selling is a trading strategy where investors borrow stock and sell it with the hope of buying it at a low price. Investors make profit if the stock price decreases. On the other hand, short selling may be a risky strategy because if the stock price increases, the investor will buy at a high price. 

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A blue chip stock is a stock which is a well established, financially stable company with consistent good performance and dividends. These companies are actually leaders of these industries. These stocks are less risky from other stocks. These are companies like Reliance, Tata, Hindustan Unilever, infosys etc.  

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Penny  stocks are those stocks which are low price stocks, penny stocks are commonly small companies or new companies which stock price less than 1$. Penny stocks are considered high risk stocks.Investor should research about those companies before investing penny stocks. Some of the companies may be fortunate, so  Here is another opportunity for small investment with high return.

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Growth stocks are those stocks which are constituencies showing good performance and the stocks value increase faster than different stock values. These companies have strong potential for earning growth. Growth stocks are in technology and healthcare industries. Growth stocks are those stocks who are generating revenue, profit faster than industry average.

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The value of stock is the current share price of that stock.Value stocks are found in that companies have strong financial and strong fundamentals. Value investors believe that these stocks are good investment opportunities. And they have potential to raise the stock price as the market price now.

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Dividend yield is a financial ratio that defines the amount of dividend paid by the company to its share price. It is calculated by dividing the annual dividend per share by the current market price of the stocks. The results percentage is known as Dividend yield. A higher dividend yield may be desirable for the investor, as the same as Lower dividend yield may indicate a growth oriented company. 

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Earning per share (EPS) is a financial ratio that measures the net profit of a company that can be attributed to each share. It is calculated by dividing the company net income by the number of outstanding shares. Earning per share (EPS) is an important factor for investors because it provides insight of company profitability on a per share basis. Which will help to see company performance and also can compare to other companies. 

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The price to earnings (P/E) is a financial calculation which is used to evaluate the value of company stock. It is calculated by dividing the current market price of stock by its earning per share (EPS) . High P/E ratio that means it indicates the market has high expectations of the company’s future growth. And Low P/E ratio indicates the opposite of that. Investors commonly used P/E Ratio to make investment decisions and compare to other companies. 

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The price to book (P/B) is a financial factor which is used to evaluate the company’s market value to its book value. It is calculated by dividing current market price per share by the book value per share. The book value is calculated by total assets Minus Liability. Low P/B ratio indicates that the stock is undervalued. While high P/B ratios indicate stock is overvalued. 

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Price to sales (P/S)Ratio is used to evaluate a company’s stock price to its revenue.  It is calculated by dividing the company market capitalisation by its total revenue. The Price to sales P/S ratio is very useful to compare to other companies in the same industries. It indicates how much investors are ready to pay for each dollar of company revenue. 

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The debt to equity ratio helps to compare a company’s total debts to its total equity. It defines the amount of debt finance used by a company to the amount of equity. Higher debt to equity ratio indicates that the company has a higher level of debts. Which means higher risk to investment. 

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Dividend payout ratio is the percentage of the company earning and paying a dividend to their shareholder. It is calculated by dividing the dividend per share by earning per share. Example if company has earning Rs 10 per share and payout Rs5 per share as dividend thenthe dividend payout ratio is 50%. High dividend payout ratio indicates the company performance. 

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Stock exchange traded fund (ETF) is an investment fund that trades on the stock exchange same like individual stock. Stock exchanges hold a basket of assets like stocks , bonds, commodities. An ETF offers the investor a low cost way to make a portfolio. They also charge lower management fees compared to mutual funds. 

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Mutual fund expense ratio is the annual maintenance fee charged by a mutual fund company to manage investors assets. They charge in different ways like management fees , operating cost, and other administrative expenses. The mutual fund expense is deducted from investors fund assets. It’s important to know the mutual fund expense ratio before choosing a mutual fund. 

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Mutual fund net asset value (NAV) is the per share value of the fund’s asset minus its liability. It is the price at which investors can buy and sell stock in the funds. NAV is calculated by dividing total value of assets by total number of shares. Mutual fund companies calculate NAV once a day, at the close of the market. Investors can use the NAV to track performance of mutual funds. 

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Mutual fund load is a fee which an investor will pay at the time of buy and sell shares of mutual funds. There are two types of mutual fund load one is front end load and another is back end load. Front end load is a fee charge at the time of buying, and back end load is a fee charge at the time of selling stocks. Some mutual funds do not have loads. 

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Mutual fund prospectus is a legal document which provides all information about mutual funds like Investment objectives, Fee,risk and previous performance to the investor. It is required to be provided to investors before investing in mutual funds. Mutual funds prospectus including all information about funds are type of investment, Investment strategy, and all fees and expenses. Investors need to carefully review this document before investment.

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Mutual funds investment objective is a goal to achieve with its investment strategy. This objective depends on fund types such as growth, income, and balance funds.It is designed to help investors understand the funds strategy. It will help investors make decisions to invest in mutual funds or not. 

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In the stock market index is the performance group of stocks. It is a portfolio of stocks selected for certain criteria, like market capitalisation, particular industry and geographic location. Index value calculated based on performance of the stocks Investor can buy a group of stocks without having to buy individual stocks. 

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NSE Stands for National stock exchange of India and BSE stands for Bombay stock exchange. Both are providing platforms for buying and selling securities like stocks, bonds and mutual funds. NSE was founded in 1992 and it is the largest stock exchange in india. The BSE is the oldest stock exchange in Asia founded in 1875, It is located in Mumbai. It has more than 5500 listed companies. 

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Bank nifty is a stock market index in india. Its groups of banking Sectors. It is the most liquid and large capitalised banking stocks listed on National stock exchange (NSE) of India. Bank nifty index especially useful for those investors who want to invest in the banking sector. Before trading in the bank , nifty required good understanding in the banking sector with technical and fundamental knowledge required. 

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In the stock market equity is an asset(stock/share) which investors can buy and sell in the stock market. When  a person buys equity of a company he/she will also have a small ownership of that company. If company performance is good and increases company value , the equity value also increases. Investing in equity is highly risky so you need to do proper research before investment. 

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Option trading in the stock market is to buy and sell stocks in index like , nifty 50, Bank nifty etc.. In option trading buyers have the option to buy call options to betting for increased asset value. Option trading also has the option to buy Put option to betting to decrease the asset value. Option trading can be used for a variety purpose. 

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In simple words, share market stock market / equity market. It is a marketplace where investors can buy and sell stocks publicly. When a company is publicly traded that means its ownership divided in small parts is called shares, which anyone can buy in the stock market. Stock market is a place where buyers and sellers come together and trade in the stock market. Stock market plays an important role in the economy. 

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conclusion

Investing in the Stock market can be impressive and profitable, but it can also be risky for beginners. So with the right guidance, knowledge anyone can become a successful investor. We hope that our Top 50 stock market questions help you to know the basics of the stock market. Being updated and learning about the stock market will help you to make a good portfolio and you will achieve your goal. 

 

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