Monday, 20 January 2014
The Various Options to Invest in Equity Shares
The scenario
however seem to be changing with each passing time, and the completely open
knowledge and investment education available hands on. The apprehensions are
shedding off and the avenues of investments are pondered upon.
Let us try
to simplify the fuss over equity shares and how to deal with. There are two modes
you can invest in equity shares; one is with the help of a broker another being
online commodity trading. Equity
shares commonly called as the ordinary share also happens to be a kind of
representation of a minute ownership. Therefore the shareholder undertakes the
maximum entrepreneurial risk associated with a business venture
There are
various types of equity shares such as follows:
- Rights Issue/ Right shares, issuing of fresh securities to existing shareholders at a ratio to those already held.
- Bonus shares are the shares issued by the companies to the already existing shareholders with no extra cost by bringing to use the reserves accumulated from the profits earned in the previous years of investment.
- Preferred Stock/ Preference shares are the kind of shares where the owners are entitled to a fixed dividend or the dividend calculated at a fixed rate to be paid in respect of equity share. They also share a preference over equity shareholders in payment of surplus. But in the case of liquidation, the company creditors, bondholders/ debenture holders are given the preference
- Cumulative
Preference Shares: A sub category in the preference type of shares on which if remains are unpaid dividends get accumulated. Before paying the dividend on equity shares the preference dividend have to be paid.
- Cumulative Convertible Preference Shares: Another sub category in the preference type where the dividend payable on the same accumulates if not paid. Over a period of specified date these shares will be converted into equity capital of the company
- Government Security (G-secs): These are issued by the Reserve Bank of India on behalf of Government of India, more of a sovereign coupon bearing instruments, in the position of the Central Governments market borrowing programs. These are to be paid on half-yearly basis specific dates as they are more of fixed coupons. These securities come in a varied range of maturity dates, from short dated to long dated.
- Debentures: These are bonds that a company issues usually which are payable half yearly on specific dates bearing a fixed rate of interest. The principle amount on particular date on redemption of the debentures is repayable.
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