Manish owns a chocolate company in Delhi. Some time back, he wanted to expand his business, but to do so, he required 10 lac rupees. Manish had 5 lac rupees with him but still needed another 5 lac for implementing the planned expansion.
To raise this sum, Manish gave up 50% of the company ownership & issued 500 shares priced at Rs. 1000 each.
50 people decided to buy 10 shares each, by investing Rs. 10,000. This made each of them 1% share-holder in Manish’s company.
After 5 years, Manish’s company has grown multi-fold. With branches in Jaipur & Lucknow it is now valued at Rs. 1 crore. Each investor who bought 10 shares has also multiplied his 10,000 rupees investment to 1 lac.
Shares are portions of a company, which can be bought by an individual. Any investor can buy shares of publicly traded companies by opening a demat account with Angel One.
Amit is relatively new to the world of trading. He often comes across the term ‘Stock Valuation’ but has never fully understood it.
So, here’s a basic insight into the concept:
Stock Valuation entails several methods that are used to value a stock
2 most commonly used Valuation methods are – absolute & relative.
The Absolute Valuation
models attempt to find the true value of an investment based only on the company’s fundamentals like dividends or its cash flow.
Relative Valuation
models operate by comparing the company in question to other similar companies & involve calculating multiples or ratios, such as price-to-earnings multiple.
Generally several valuations are done to create a range of possible values for a given stock.
With a better knowledge of the valuation model, Amit can now make informed investments decisions & start online share trading with Angel One as his trusted partner.
Become a Value Investor by opening a Trading & Demat Account with Angel One
As a new investor in the stock market Vinod wants to understand the Primary & Secondary Markets.
His friend Asish – an active trader with Angel One, explained:
Primary Market
The primary market is where the stocks are created & secondary market is where stocks are traded.
When a company decides to go public for the first time by raising an IPO, it is done in the primary market. Here a company sells its shares directly to the investors.
After the shares are bought for the first time in the primary market, traders buy and sell these shares among themselves in the secondary market.
Secondary Market
In the secondary market, the issuing company is not involved directly in any transaction.
So, in the primary market Vinod will buy shares directly from a company while in the secondary market, Vinod will buy or sell shares to another trader.
With a better understanding of share market investment, Vinod is now, ready to trade with Angel One as his trusted partner.
If you are ready to trade, Let us help you in Opening a Demat Account.
Vinod & Venkat are best friends but their habits are different.
Vinod is tech-savvy & does everything online, Venkat on the other hand, prefers traditional methods over online transactions.
Likewise, their stock trading methods are also different.
An avid trader, Vinod prefers trading online. Through his online trading account he can track the market & buy or sell stocks himself at anytime from anywhere. He also receives expert advice, research reports & live market updates through multiple trading platforms accessible via his desktop, tablet & mobile phone.
Venkat, however, prefers offline trading since it gives him the opportunity to garner first-hand advice. So, when Venkat decides to buy or sell a stock, he calls his broker, who guides Venkat on the trade with professional expertise & then places the trade on Venkat’s behalf.
Online or offline – Choose your trading preference – at Angel One. You now understand the the comparison of Online Vs Offline Trading Account
