Published : 13 Apr 2023
Equity simply refers to the number of shares of a company by an individual or institution. Buying stocks of a company translates into owning equity in the company thus having a sense of ownership of the company.
The ask price is the lowest price quoted to the seller of a stock and he/she is willing to accept for a share of that stock. Inversely, a bid price refers to the highest price that a potential buyer for a stock is willing to pay for a share of that stock.
A stock’s volatility depends on how much of its original price fluctuates from the point it was earlier traded. The more it deviates from the price, more the volatility it experiences. Many traders like to take advantage of this volatility and make gains while investors opt for less volatile stocks.
Yield is nothing but earnings generated by investing in financial instruments over a period of time and is expressed in percentages. It includes the dividend or the interest earned by the specific security along with the price appreciation of the security.
When the overall sentiment of the market negative (i.e., the stock/index prices fall), it is considered a bear market. Inversely, when the overall sentiment of the market is positive (i.e., the stock/index prices), then it is considered a bull market
Every stock has a certain limit within which it can either go up or down. The limit could be 2%, 5%, 10%, or 20%. If a stock price, with circuit limit of 20%, zooms 20% on the upside, then it is said to have hit the upper circuit and if the price falls by 20%, then it is said to have hit the lower circuit.
A position is said to be a long position when an investor/trader buys a stock. A long position is taken when the participant believes the prices will move up. A position is said to be a short position when an investor/trader sells a stock.
A short position is taken when the participant anticipates that the prices will go down. However, taking a short position/shorting a stock, means that the participant believes the prices will fall, so he sells the stock (ideally borrowed from the broker) at high prices and as the prices falls, he buys back it at a cheaper rate and pockets the difference.