What is share market?
The stock market, also known as the securities market or share market, is a marketplace where stocks and other securities are bought and sold. Stocks are shares of ownership in a publicly traded company. When an individual or institution buys a stock, they become a shareholder of that company and have the potential to earn a return on their investment through dividends and capital appreciation. The stock market allows companies to raise capital by issuing shares and allows investors to buy and sell those shares, providing a way for companies to raise funds for growth and for investors to earn a return on their investment. The stock market is typically divided into two main categories: primary and secondary markets. The primary market is where new securities are issued and sold to the public for the first time, whereas the secondary market is where securities that were previously issued are traded among investors.
What is FPO?
FPO stands for "Follow-on Public Offer," which is a type of securities offering in which a company that has already gone public offers additional shares to the public. FPOs are used by companies to raise additional capital from the public, and they typically involve the sale of new shares that are issued by the company. In contrast to an initial public offering (IPO), which is the first time a company sells shares to the public, an FPO involves the sale of additional shares by a company that has already gone public.
FPO can be further divided into two types:
Rights issue: where existing shareholders of a company are given the right to purchase additional shares in proportion to their existing holdings at a discounted price.
Public issue: where a company raises capital by issuing shares to the general public.
FPOs are also used as a way for companies to provide liquidity to existing shareholders, and also to dilute the holdings of controlling shareholders who wish to reduce their stake in a company.
What is IPO?
An initial public offering (IPO) is the process by which a privately held company raises capital by selling shares of stock to the public for the first time. The process of going public allows companies to raise capital from a large number of investors, which can be used for a variety of purposes such as expansion, acquisition, and debt repayment. It also allows company's founders, employees and early investors to cash out some or all of their holdings.
The IPO process typically involves several steps:
Hiring an investment bank to act as an underwriter, which helps the company prepare for the IPO and ensures that the shares are priced correctly.
Filing a registration statement with the securities regulatory authorities, which provides detailed information about the company's financials, management and business prospects.
Going on a "roadshow" where the company's management and underwriters meet with potential investors to market the company and its stock.
Setting the price of the shares, which is determined through a process called "book building" where the underwriters gauge demand for the stock and set the price accordingly.
Allotment of shares to investors and listing of shares on stock exchanges.
After an IPO, shares of the company are traded on a stock exchange, and the company becomes a publicly traded company.
It is important to note that IPO's can be risky investments as the stock prices of newly public companies can be highly volatile and there is a lack of historical financial performance to predict the future of the company.
What is Mutual fund?
A mutual fund is a type of investment vehicle that pools money from multiple investors to purchase securities, such as stocks, bonds, and other assets. The value of a mutual fund is determined by the value of the underlying securities it holds, and the fund's net asset value (NAV) is calculated by dividing the total value of the fund's assets by the number of shares outstanding.
A mutual fund is managed by a professional fund manager who makes investment decisions on behalf of the fund's investors. The fund manager uses the money pooled from investors to buy a diversified portfolio of securities that align with the fund's stated investment objectives. The fund manager also monitors the performance of the securities in the portfolio and makes adjustments as needed to meet the fund's investment objectives.
Mutual funds are known for their diversification, professional management, and liquidity. They are considered to be a relatively low-cost and convenient way for individuals to invest in a diversified portfolio of securities and participate in the growth of the stock market or other market sectors, without having to individually research and select individual securities. Mutual funds also offer different types of funds such as equity funds, debt funds, balanced funds, index funds, and sectoral funds, catering to the different investment needs and risk appetites of the investors
