What is Stock Market and how it works ?

Stock ownership implies that the shareholder owns a slice of the company equal to the number of shares held as a proportion of the company's total outstanding shares. For instance, an individual or entity that owns 100,000 shares of a company with 1 million outstanding shares would have a 10% ownership stake in it. Most companies have outstanding shares that run into the millions or billions.

When you buy a share of a stock, you automatically own a percentage of the firm, and an ownership stake of its assets. If you paid $100 for a share of stock, and the stock appreciates in value by, say, 10% during the period you own it, you've earned $10 on your stock investment.

to invest in solid, well-managed companies that turn a profit. A company that succeeds on those fronts stands a good chance of its stock price growing in value, while the company, in going public, makes use of the proceeds of the original stock sale to reach growth goals and manage operating expenses. The company can use the cash to invest in new markets, research new products, hire more workers and better advertise their products and services, among other things.

While there are two main types of stock – common and preferred – the term "equities" is synonymous with common shares, as their combined market value and trading volumes are many magnitudes larger than that of preferred shares.

it doesn't take much effort to buy stock shares and own a piece of a company. You would simply pay what the market is demanding (market price) for a particular stock, via a stockbroker either over the phone or via a digital device, and you're good to go. You'll receive confirmation of your purchase and can sell the stock whenever you like, hopefully for a profit.

There really isn't just one single stock market -- there are many stock markets around the world, although the most well-known include the New York Stock Exchange (NYSE), Nasdaq, and the London Stock Exchange (LSE).

The main distinction between the two is that common shares usually carry voting rights that enable the common shareholder to have a say in corporate meetings (like the annual general meeting or AGM) – where matters such as election to the board of directors or appointment of auditors are voted upon – while preferred shares generally do not have voting rights.

Stock markets are public trading venues that enable investors of all stripes to buy, sell and issue stocks on an exchange, or via over-the-counter (OTC) trading. An OTC market is "A decentralized market, without a central physical location, where market participants trade with one another through various communication modes such as the telephone, email and proprietary electronic trading systems." according to Investopedia.

Preferred shares are so named because they have preference over the common shares in a company to receive dividends as well as assets in the event of liquidation.

The stock market also has indexes that track the performance of a specific group of stocks. For example, the Dow Jones Industrial Average is the price-weighted average of 30 of the largest companies in the world, including 3M (MMM - Get Report) , Disney (DIS - Get Report) , and Exxon (XOM - Get Report) .

Common stock can be further classified in terms of their voting rights. While the basic premise of common shares is that they should have equal voting rights – one vote per share held – some companies have dual or multiple classes of stock with different voting rights attached to each class.

In such a dual-class structure, Class A shares for example may have 10 votes per share, while the Class B "subordinate voting" shares may only have one vote per share.

Dual- or multiple-class share structures are designed to enable the founders of a company to control its fortunes and strategic direction.

To actually buy shares of a stock on a stock exchange, investors go through brokers -- an intermediary trained in the science of stock trading, who can get an investor a stock at a fair price, at a moment's notice. Investors simply let their broker know what stock they want, how many shares they want, and usually at a general price range.That's called a "bid" and sets the stage for the execution of a trade.

A stock price is the absolute measure of a company's worth to investors. For most investors, the goal is to "buy low and sell high." In that regard, a stock price also represents what other investors will pay to buy a stock at a specific time. That's why indexes track stock prices so closely -- they give investors the price other investors recently paid to buy a stock and provide a financial framework to ascertain a stock's worth and value.

Today's corporate giant likely had its start as a small private entity launched by a visionary founder a few decades ago. Think of Jack Ma incubating Alibaba Group Holding Limited (BABA) from his apartment in Hangzhou, China, in 1999, or Mark Zuckerberg founding the earliest version of Facebook, Inc

Stocks are a historically-proven way to make a financial profit, and rank well ahead of other securities in terms of performance returns.

Yet like any other financial venture, the return you get on stocks is largely dependent on the work you put into researching stocks.

Basically, the more you learn, the more you earn

(FB) from his Harvard University dorm room in 2004. Technology giants like these have become among the biggest companies in the world within a couple of decades.

However, growing at such a frenetic pace requires access to massive amount of capital. In order to make the transition from an idea germinating in an entrepreneur's brain to an operating company, he or she needs to lease an office or factory, hire employees, buy equipment and raw materials, and put in place a sales and distribution network, among other things.

If you want to invest in stock market, first you should understand how the stock market works in India. Buying a share or stock of a company simply means you are buying a unit of the company. Investors are able to buy the stocks of the company once the company share is launched in the market.

These resources require significant amounts of capital, depending on the scale and scope of the business startup.

company once the company share is launched in the market.
Share is a unit of ownership of a company and is offered for sale in the market when a company needs to raise money for further growth. The shares in the market are launched in the form of initial public offering (IPO)

A startup can raise such capital either by selling shares (equity financing) or borrowing money (debt financing). Debt financing can be a problem for a startup because it may have few assets to pledge for a loan – especially in sectors such as technology or biotechnology, where a firm has few tangible assets – plus the interest on the loan would impose a financial burden in the early days, when the company may have no revenues or earnings.

The price of IPO of a company is decided based on how much the company is estimated to be worth, and how many shares are being issued. The company gets to keep the money raised to grow its business, while the shares or stock of the company continue to trade on an exchange, such as the National Stock Exchange and Bombay Stock Exchange.

Equity financing therefore is the preferred route for most startups that need capital. The entrepreneur may initially source funds from personal savings, as well as friends and family, to get the business off the ground.