SHORT WRITE ABOUT STOCK SHARE AND RISK

PRESENTED BY:

Yarima Liseth Paternina Delgado ID 710162

TEACHER:

Blanca Eugenia Tarazona

BUCARAMANGA/2019
 INTRODUCTION

In the following work we will analyze the types of shares and investment products, know
the advantages and disadvantages when investing in shares, the risks that arise and analyze how
you can access the stock market.
 The factors that affect the share price

The stock price changes every day as a result of market forces That is to say that share prices
change due to supply and demand. If more people want to buy a stock (demand) than sell it (offer),
then the price goes up. Conversely, if more people want to sell a stock rather than buy it, there is a
greater supply than demand, and the price falls.

Understanding supply and demand is easy, what is difficult to understand is what makes people
like one particular action and not another. This is related to the news that circulates around a
company, depending on whether it is positive or negative. There are many answers to this problem
and almost all investors have their own and strategies.

The main theory is that a stock’s price movement indicates what investors think a company is
worth. You cannot compare the value of a company with the price of the shares. The value of a
company is its market capitalization, which is the share price multiplied by the number of shares
outstanding.

The price of a share not only reflects the current value of the company, but also reflects the growth
that investors expect in the future.

How do you know which Company to invest in?

Always invest in listed companies. That the companies in which we put our money are listed on the
stock exchange has three great advantages, liquidity, valuation and transparency.

Liquidity is about being able to easily find buyers and seller, which has the added advantage of
adjusting prices much better, likewise, a company that is larger or with a higher percentage of its
capital in the stock market, has more liquidity than a smaller one, and a larger market will also
facilitate operations.

Lastly, listed companies are obliged to publish all the information that may affect the price of their
shares and communicate it to the CNMV.

Are there different types of share and investment products?

There is a wide range of different types of actions:

 Common or ordinary shares: type of shares that entitles the holder to participate in company
profits.
 Preferred shares: type of share that reflects the equity value that has priority over common
shares with respect to the payment of dividends. The dividend rate of the shares can be
fixed or variable, establishing said value when they are issued.
 Limited voting shares: These shares grant the right to vote on certain issues of the company
appearing in the share subscription contract. As compensation, said shares are preferred or
entitled to a higher dividend than ordinary shares.
 Convertible shares: they are the type of shares that can be converted into bonds, although
bonds are usually converted into shares.
 Industry actions: allow shareholder input to be in the form of a service or job
 Released shares: these are the shares issued without obligation to pay them by the
shareholder, since they are paid out of profits or profits that the shareholder should have
received.
 Own action: action in which the owner is the issuing entity.
 Shares with nominal value: these are the shares in which the value or the contribution
appears numerically.
 Shares without par value: these are the shares that do not include the amount of the
contribution, only the equivalent proportional part in the share capital.

Investment products
 Paid accounts: they are accounts that give us a small interest and, in exchange, offer us the
advantage that we can have the capital at all times.
 Deposits: deposits are the most basic and well-known investment product that exists.
 Guaranteed funds: as its name suggests, the main virtue of this product is that the capital
we invest is insured, so the is no risk that we will lose money.
 Savings insurance
 Public debt
 Corporate debt of the company

What is the risk?

Although the main risk of any investment is the loss of capital, it is important to know what
the factors that can cause these losses are and how to avoid them. Similarly, it is vital to
know that there are financial products in which you can lose the money invested, they are
derivative and leveraged products.
Some risks are:
 Default or bankruptcy risk
 Exchange rate risk
 Market risk
 Liquidity risk
 Inflation risk

Is the risk involved when investing in shares?

Yes, there are investments that make money and others that don’t you can potentially make
money and others that don’t you can potentially make money on an investment if the
company performs better than its competitors, or if other investors recognize it as a good
company, it makes a profit.
Can you minimize the risk of my investment?
All investments carry a risk, some to a greater or lesser extent than others, but all of them
surely present the risk that the investor will achieve poor results, which includes the
possibility of losing part or all of his money.
The objective of an investors should be to look for those investments where the risk is the
minimum, although, generally, when an investment presents minimal risk, the profitability it
offers is also minimal, and conversely, the greater the risk it presents, the greater the
profitability it offers.
An investment strategy designed to reduce risk by combining various investments (eg
stocks, bonds and real estate). Having varied investments reduces the probability that all of
them will rise or fall at the same time or to the same extent.

Is it difficult to manage your investment portfolio?

When managing an investment portfolio we must take into account some parameters, at
some point it becomes difficult, but I think that having a good training on the subject,
everything will be easier.

Do you need a lot of money to start investing?

To invest you don’t have to have a lot of money, but if you have to bear in mind that we must
set aside an amount periodically and constantly in order to dedicate it to investment.
How do you gain access to the stock market?
In principle, anyone with a surplus of money can invest in securities in the stock market,
stocks and debt instruments with the aim of obtaining a return on their investment. For this,
you must have the necessary information to make a good investment. Whereas a saver who
deposits his money in a bank only requires information about the interest rate, the costs of
maintaining that account and, in some cases, the conditions to withdraw his money or
cancel the deposit, to invest satisfactorily in the stock market needs more information.
This is so because the investors (no longer the bank) is the one who runs the risk of losing
his money in a bad investment. Hence, the profile or the stock market investor is more
sophisticated than that of an account holder.
This does not mean that the stock market is not within the reach of the general public, on
the contrary, due to its volume, public savings is a fundamental source or the stock market
to cover the supply of securities issued by companies.
 CONCLUSION

In this work, I can conclude that investing is good as long as you know the market and the values
that are managed, just as you should know that investing always brings the risk, of deciding
whether to take it or leave it, it is worth mentioning that the investor market it is very risky and
voracious.