STOCK MARKETS

Stock markets facilitate equity investment into firms and

the transfer of equity investments between investors.
PRIVATE EQUITY

When a firm is created, its founders typically invest their

own money in the business. The founders may also invite
some family or friends to invest equity in the business. This
is referred to as private equity because the business is
privately held and the owners cannot sell their shares to the
public.
PUBLIC EQUITY
When a firm goes public, it issues stock in the primary
market in exchange for cash. This changes the firm’s
ownership structure by increasing the number of owners. It
changes the firm’s capital structure by increasing the equity
investment in the firm, which allows the firm to pay off some
of its debt. It also enables corporations to finance their
growth.

A stock is a certificate representing partial ownership in the

firm. Like debt securities.
INITIAL PUBLIC OFFERINGS
A corporation first decides to issue stock to the public in
order to raise funds. It engages in an initial public offering
(IPO), which is a first-time offering of shares by a specific
firm to the public.

Process of Going Public:

• Developing a Prospectus.
• Pricing
• Allocation of IPO Shares
 STOCK OFFERINGS AND REPURCHASES

• Secondary Stock Offerings: A secondary stock offering is a

new stock offering by a specific firm whose stock is already
publicly traded. Some firms have engaged in several
secondary offerings to support their expansion.

• Stock Repurchases: When corporate managers believe that

their firm’s stock is undervalued, they can use the firm’s
excess cash to purchase a portion of its shares in the market
at a relatively low price based on their valuation of what the
shares are really worth.
STOCK EXCHANGES
• Organized Exchanges: Each organized exchange has a trading
floor where floor traders execute transactions in
the secondary market for their clients.
• Over-the-Counter Market
• Extended Trading Sessions
• Stock Quotations Provided by Exchanges
• 52-Week Price Range
• Symbol
• Dividend
• Dividend Yield
• Price-Earnings Ratio : represents its prevailing stock price per share divided
by the firm’s earnings per share (earnings divided by number of existing
shares of stock)

https://www.amarstock.com/trend-analysis
Assignment:
What indicators need evaluate to analyze the
capital Market to invest in a particular company
and Key financial ratios you must look at before
making investment?