ON-LINE SHARE TRADING
“Share” or “Equity” represents part of an ownership of a business. So as a shareholder you own a piece of the action that happens in that business. Why would you want a piece of the action? For the rewards of course. As a shareholder you have a right over the profits generated by your business. Your company might pay out the profits generated every year as dividends or it may retain the profits to further grow them.
There’s another way you as a shareholder can make money. If your company does well, then its shares listed on the stock market become more valuable and the stock price appreciates. On the other hand, the company might perform badly. Then not only do you not get dividends but the stock price also declines. Hence investing in shares is a risky proposition.
When you invest in shares, you can expect certain returns based on the fundamentals of a business. However you have no control over it. What you have control over is managing risks associated with it.
Imagine a business is set up with initial investment of say 10 billion. The promoter, the person who starts this venture has say 40 billion and needs another 60 billion.
So he may opt for getting this amount from public in a country. So he will get the government permission for the same explaining the authorities the need.