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8/14/2019 SHARES Finalpwrpt
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:OPIC
SHARES
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I n t r o d u c t
:o n
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ypes of
:hares hares can be
roadly divided:nto
quity Shares and reference Shares
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quity
:hares quity share is also eferred to as ordinary
hares and in Indian ontext i t is defined by
( )ection 85 2 of the.ompanies act 1956 They
-re the real risk takers-nd care takers of the ompany and they enjoy
.he right of voting
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reference
:hares apital stock which provides a pecif ic dividend that is
aid before any dividends are
,aid to common stock holders nd which takes precedence ver common stock in the
.vent of liquidation Like
,ommon stock preference hares represent part ial
,wnership in a company l though preferred stock
hareholders do not enjoy any
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dvantages of:reference Shares
• -ax free status•
onsistent dividendpayments•
requency ofpayments
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:isadvantages t will not move
ike ordinary.tocks t might not be the
sset type for nvestors looking
or explosiveins
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ypes Of:reference Shares
-umulative and Noncumulative
-edeemable and NonRedeemable
articipating Preference-hare and non articipating
reference shares
onvertible and Non
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ther types of:hares
quity Shares an be
lassified as:ollows
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lue Chip:hares amed after the
-ighest value gambling
,okens in a casino lue chips are the
argest companies
hose shares are
raded on major stock.xchanges Blue chips
-end to be high
, - -rofi le house hold
ame companies with
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lue chips share everal important
haracterist ics:ncluding n established record of table earning power over
everal decades n equally long record of ninte rru pted dividen d
ayments to common stock
olders history of regular
ncreases in the dividends ayable to each share
t rong balance sheets with a
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igh credit rat ings in he bond and ommercial paper
arkets arge size relative to
merican businesses as whole in terms of
evenue and market apital ization iversified product
( . .,ines e g General
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ncome
:hares he term can refer to shares
ought in anticipation of an bove average income being
.roduced Also referred to as.igh yield shares This
ormally means that the
nvestor has chosen shares in ompanies that have a history f paying consistently high
.ividends There is no uarantee that the companies
i l l continue to provide the
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yclical and Non
:yclical share,hese terms cyclical and
- ,on cyclical refer to how
ighly correlated a ompany's share price is.o economic fluctuations
-on cyclical stocks
epeatedly outperform the arket when economic,rowth slows while
yclical companies are
ighly correlated to the
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. -yclical vs Non:yclical Company
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:rowth Shares hares issued by a firm
i th a consistent ecord of above average.arnings Such shares
re expected to trade
t an increasing value ver an extended
. ,eriod In many ways a
rowth share is the
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peculative:hares
peculative shares are,sually small companies
.ften newly formed These ompanies are almost always
ocused on delivering– .rowth fast As
,nvestments speculative hares are high risk due to
lack of financial trength or track record in
.arnings and dividends
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:alue shares value share is one that
‘ ’.ooks cheap Value shares
end to have low PE ratios .nd high dividend yields,s such value shares are
ften either defensive
(hares which typically)ave low PE ratios or(ncome shares which have
).igh dividend yields
,owever growth shares can
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:uali ty shares robably the most important
lass of shares are.uali ty shares Quality hares can be found in any
.f the above categories
,ook for great management-rock solid business and,inances and a track
ecord of growth in
.rofi ts and dividends
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hares can also be
:lassified as
arge Cap-id Cap
mall or icro Cap
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:ONCLUSION