Chapter 3
What is Equity Market?
An equity market is a market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.
Indices
An index is a statistical measure of the changes in a portfolio of stocks
representing a portion of the overall market.
A stock market index is a single number calculated from the prices of many
different stocks.
Index is also called indices when you talk about more than one of them. Indices
are used as benchmarks of stock performance for portfolios like mutual funds.
Some investment funds (index funds) manage their portfolio so that their
performance mirrors (tracking) the performance of a stock market index or a
sector of the stock market.
FBM Kuala Lumpur Composite Index (FBM KLCI)
Today known as FTSE Bursa Malaysia Kuala Lumpur Composite Index
(FTSE Bursa Malaysia KLCI)
Securities Traded on Bursa Malaysia
a) Ordinary share
b) Preference share
c) Loan stock
d) Others (Warrant, Call warrants, Property trust, Close-end fund,
and Exchange Traded fund)
Ordinary Stocks/ shares
Same as common stocks or shares which represent the basic voting shares within a company or corporation. The holder of an ordinary share is usually entitled to one vote per share. Through the system of ordinary stocks, equal ownership is made apparent with the system of distributing shares in accordance to shareholder’s percentage ownership in the company.
Preferred Stocks/ shares
Everything other than the aforementioned shares of a company's stock are, by definition, preferred stocks or shares.
Loan Stock
Loan stock is shares in a business that have been pledged as collateral for a loan. This type of collateral is most valuable for a lender when the shares are publicly traded on a stock exchange and are unrestricted, so that the shares can be easily sold for cash.
What is Call Warrant?
What is REIT?According to the Securities Commission Malaysia (SC) 2005
Guidelines on Islamic REITs “In general, an Islamic REIT is a collective investment
scheme in real estate, in which the tenant(s) operates
permissible activities according to the Shariah”. This would
involve acquisition and leasing of real estate (including
tenancies and sub-tenancies), where the activities and
operations are Shariah-compliant.
Closed-End Fund A closed-end fund is organized as a publicly traded
investment company by the Securities Commission (SC)
Exchange Traded Fund (ETF) An exchange traded fund is an open-ended, index-tracking unit trust fund. The SC's Guidelines on Exchange Traded Funds defines an ETF as ◦ a listed index-tracking fund structured as a unit trust scheme whose primary objective is to achieve the same return as a particular market index by investing all (full replication) or substantially all (strategic sampling) of its assets in the constituent securities of the index. Generally, the principal objective of an ETF is to track or replicate the performance of a benchmark index.
THANK YOU FOR READING. HOPE U ALL CAN UNDERSTAND CHAPTER 3 OF ICM <3
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