In order to raise capital, several companies sell parts of their company’s share to the public. This is known as share and a number of shares is known as stock. A stock market is a place where the purchase and sell of stocks take place; this transaction take place between clients and the stock exchange. The price of a share is directly proportional to the demand of the share. People invest in stock market in order to earn more returns. In stock markets there are huge returns associated with high risks too. Investments in the stock market are increasing day by day. One, before investing in the market should have the following advantages and disadvantages of stock markets in mind.
Advantages
In the stock market, in the present scenario a customer can have multiple choices of stocks and accordingly he can choose the best that suits his investment plans.
Investments in stocks provide huge gains, unlike other investments.
Legal liability for stocks are less; stock holders, who take no active parts in company’s day to day affair, are prohibited against any liability cropping out from the company’s actions.
Disadvantages
Investing in a stock of a company will surely lead to some rights to the stock holder. However, these rights are limited; there are some decisions taken by the company about which the stock holders remain unaware.
Often the stock prices remain volatile and at this juncture one should be very aware before investing in such. Therefore, a clear knowledge about the company and its current financial status should be kept in minimizing risks.
Value of stocks at many instances change without any valid reasons. This is often becomes frustrating for the shareholders but one should have utmost patience in such cases.
In stock markets prices of the stocks are erratic and never stable. Thus in order to invest, one should be very much clear about his own investment plans and should also be apparent with the company’s profile in which he plans to invest.
Advantages
In the stock market, in the present scenario a customer can have multiple choices of stocks and accordingly he can choose the best that suits his investment plans.
Investments in stocks provide huge gains, unlike other investments.
Legal liability for stocks are less; stock holders, who take no active parts in company’s day to day affair, are prohibited against any liability cropping out from the company’s actions.
Disadvantages
Investing in a stock of a company will surely lead to some rights to the stock holder. However, these rights are limited; there are some decisions taken by the company about which the stock holders remain unaware.
Often the stock prices remain volatile and at this juncture one should be very aware before investing in such. Therefore, a clear knowledge about the company and its current financial status should be kept in minimizing risks.
Value of stocks at many instances change without any valid reasons. This is often becomes frustrating for the shareholders but one should have utmost patience in such cases.
In stock markets prices of the stocks are erratic and never stable. Thus in order to invest, one should be very much clear about his own investment plans and should also be apparent with the company’s profile in which he plans to invest.
No comments:
Post a Comment