Invest on the stock market
The stock market is usually associated with shares, but its offer is obviously much wider. Investors can trade in a number of risk-differentiated financial instruments, ranging from bonds to structured products and derivatives.
Shares are securities confirming that their holder (shareholder) is the owner of some of the assets of a joint-stock company. This gives him certain rights – the right to dividend, the right to participate in a general meeting and indirectly – the right to manage the company.
Shares are the basic securities listed on the stock market and, depending on the size of the company, the value of its shares and liquidity, its shares may be listed in one of two systems: either in a continuous trading system or a single-price auction.
The pre-emptive right is the pre-emptive right to acquire new issue shares vested in the existing shareholders of the company. However, existing shareholders may waive the right to acquire new shares by selling their pre-emptive rights on the stock market.
The pre-emptive rights are traded on the exchange as an independent security. It should be remembered, however, that trading in pre-emptive rights takes a relatively short period of time (usually from a few days to several days) and during this period the investor must sell them on the stock exchange or subscribe for shares, otherwise he will suffer a loss because the pre-emptive rights expire.
Rights to shares (PDA) enable the buyers of new issue shares to resell them before the shares are introduced to trading on the stock exchange. Trading in PDAs is subject to the same rules as trading in shares. The Rights to Shares are quoted in the same trading system as the shares of a given company.
The pre-emptive rights of bonds, commonly referred to as pre-emptive rights, are securities giving priority to their holder in the acquisition of shares in a company that will issue bonds at a predetermined price. The pre-emptive right holder knows the date of exercising the rights to acquire shares, which is predetermined in advance and ends on the date of expiration of the pre-emptive rights. The pre-emptive rights shall be quoted in the same trading system as the shares to which pre-emptive rights entitle.
Investment certificates are securities issued by closed-end or mixed investment funds. Investment certificates are a confirmation of participation in the fund and allow to determine the amount of the amount due for participation in the fund by a given participant at a given moment in time.
It is an instrument for those who, for various reasons, are not interested in investing directly in other financial instruments. Certificates are listed on the exchange on the same terms as shares.
Investors who are not afraid to take risks and have a greater knowledge of the rights that govern the capital market, the stock market allows them to invest in more complex financial instruments – derivatives.
The specificity of derivative instruments is that their price depends on the value of the so-called „fair value”. the underlying instrument, which may be e. g. securities, stock market index, currency or economic indicator.
Exchange-listed derivatives are futures contracts, index units and options. On the exchange, all derivative instruments are settled by cash settlement (except for bond contracts).
A forward contract is an agreement between two parties, one of which undertakes to buy and the other to sell, at a future date (the so called expiry date) and at a price agreed upon in the contract, a specified quantity of an underlying instrument or an equivalent monetary settlement.
After the transaction is concluded, mutual liabilities are updated on a daily basis as a result of changes in the forward contract price. Among exchange-listed futures contracts, investors have contracts on indices, share contracts, Treasury bond contracts and foreign exchange rates at their disposal.
Index units are financial instruments whose price reflects changes in the value of a given index. This instrument enables an investment equivalent to acquisition of the entire portfolio of a given index without the need to purchase individual shares of this index.
Options are derivative instruments whose issuer undertakes to cover the difference between a predetermined strike price and the settlement price of the underlying instrument at the expiration/execution date. On the other hand, the purchaser of the option has the right to demand from the issuer the option specified above.
Volume in investing on the stock exchange: