We brought together the most frequently asked questions and answers about stocks. Learn what you need to know and wonder about stocks.
Admittedly, the situation may seem a little scary when it comes to stocks and stocks. Because all those numbers, charts, jargon and abbreviations are enough to turn any new beginner. However, it is not as difficult to understand the functioning of the stock market and the stocks.
Here you can find the most curious questions and answers about stocks. So you can learn the basics or refresh your knowledge.
1.What Does a Public Offering of a Company Mean?
Public offering is one of the ways in which a company that makes growth plans collects resources. In the IPO (Initial Public Offering), which is also known as IPO, the company opens its shares to the public through the stock exchange. The new shareholders buy a certain part of the company and (hopefully) the company has collected the money needed to grow.
2.How many shares will be determined by a company?
The said company determines the financial value of the company in agreement with an investment bank before the public offering. Many “shaped” accounting techniques are used to determine the tangible value of a company, such as past and planned earnings, profit and loss ratios, products to be developed and how much the marketing department can increase interest in the company, and tangible value of similar companies.
Once the valuation process is over, the bank advises the company on how many units of shares it should sell. Upon this recommendation, the board makes its final decision. In order to maintain control of the company, the owners of the company usually do not put half of the shares in the hands of the company.
3.Who Determines How Much is the Unit Price of a Company During Public Offering?
You determine, at least somehow. The Contractor (ie the investment bank) may calculate a basic selling price based on the amount of units it is recommended to sell. But part of this pricing process is the interest in the public offering of the company.
If there is more interest in the company, the base price will be high. On the contrary, if there is little interest in the company, the price will also be low.
4.How do I know if buying a share is profitable?
For most people it is not a good idea to buy company shares one by one. People often take their friends’ recommendations into consideration when shares are gibi selling like cheese bread ”or what is happening on the market today, which is the opposite of what needs to be done for a healthy investment; all you have to do is be emotional and not rational.
If you are ready to invest in individual shares and are well aware of the risks, you can review the status of companies online through platforms such as Bigpara, Mynet Finance, Yahoo Finance and Bloomberg. You should also look at the companies’ price-to-earnings ratio; if the F / C ratio is low, then the shares are sold relatively cheaply when the forward earnings and current price are compared with the 52-week uptrend and fall. You can also take a look at reports from market analysts. The fact that a company can pay dividends to its investors indicates that it is financially healthy.
It’s a little too burdensome, isn’t it? But basically it’s enough to look at three simple things. Because what we call shares is actually a small part of the company’s existence. There are three things you should look for when buying shares; What does your company sell? Does it sell profit? Who runs the company? That’s all. If you want to know more, see how to search for a stock.
5.Why does the stock market fluctuate wildly every day?
Fluctuations are normal. Everything from oil prices to the economic situation of China or the US, and even the weather of that day, can affect these fluctuations. The best thing you can do as an investor is to focus on the long term and the big picture, not caring about these fluctuations.
6.So how can we distinguish a real problem from an ordinary market fluctuation?
Evaluating the stock’s performance according to an appropriate criterion. For example, if there is a decrease in the main stock index, it is also normal that the shares of a large-scale company you are investing in will decline.
But if your stock has dropped by 5-10% more than the benchmark, you need to seriously consider whether to hold this stock. For example, if your main stock index is down by 10%, and your large company stock is down by 11%, you may need to consider that stock.
But that doesn’t necessarily mean that you have to sell your stake. Because when you start to invest, you should not act according to daily fluctuations. If you are going to invest in stocks, you have to do this in the long term and act accordingly.
7.How Do I Calculate How Much I Should Hold a Share?
The ideal answer to this question is: Whenever you need money. Because in general, the value of the stock has little to do with this issue.
If you are afraid of losing your investment, it is OK to go back to the beginning. The decision process in the sale of shares is the same as in the share purchase process. Check whether the company makes a profit and handed it over to good managers. If the situation is still as satisfactory as when you purchased the stock, there is no need to divest the shares.
Even if the prices are falling, it is better to invest more in that company.
8.What are Dividend Payments and Why Do Some Companies Distribute Dividend Payments While Some Don’t?
Dividend payments (also known as dividends) are the money that companies pay to certain shareholders from the company’s profit. Companies that regularly distribute dividends are large and stable, and they are rich enough to do so. As a matter of fact, the fact that a company is able to pay dividends on a regular basis enables that company to attract more investors.
This does not mean that companies that do not pay dividends are always financially weak. Instead of distributing dividend payments, the company may decide to expand the company or re-invest it in another way. Therefore, companies that aim at rapid growth like most startups do not usually distribute dividends.
9.Why do some companies buy back their shares in the stock market and how does this affect my shares?
Repurchase means that it distributes its wealth and distributes the remaining surplus to its shareholders, just like dividends. How good are these companies, aren’t they? That’s only one side of the job. Repurchase is not just a simple act of generosity.
This move will increase the unit price of the company’s shares as there will be fewer shares in the market. In other words, a company does this at best, considering that its shares are sold less than what it should be, and to increase share prices. On the other hand, this move can be used to make the company’s share values look more valuable.
10.Why Should We Enter Mutual Funds Instead of Collecting Shares One by One?
Individual equity investment is too risky and does not provide diversification, this can be done but increases costs. Also, if you invest all your money in a single share, you may lose a lot of money when that stock goes down (unless they are still on the rise when it comes time to divest the shares). In addition, it is a serious business that requires you to examine individual companies and find out what to invest.
When you invest in the mutual fund, the fund managers do all this work for you. They bring together hundreds of different shares and offer you a wide range of investments. If you want to learn more about mutual funds and learn how to invest in stocks through funds, the mutual funds guide will help you with this.