Capital Market

What is stock?

Stock or Share is the smallest part of ownership of an asset/company/firm. For example you have a shop worth of Tk.10,000/= Now if you divide the ownership of the shop in 100 parts then every part will be worth of 100tk. Now each of the part is called a share/stock. Now if you buy10 part/share from that 100part then you are partially an owner of the shop/firm/company.

How it can be traded?

For example if you want to transfer your part of ownership of the firm to other then you should sale the deed of ownership to someone else. In that case you have to maintain some papers. For example a sale deed will be signed and the deed will be registered in government registry office. In case of stock when you buy stock/share of a certain company you will be given a share certificate. This certificate certifies that you own that much part of the company. And you have to register your ownership certificate with company's register. But due to some problems with paper certificate - (such as copied certificate, maintenance of huge paper certificates) a new system of electronic stock is made. In this system your stock is preserved in an electronic system rather delivering you the paper shares. And you don't need to register your ownership. The ownership is automatically transferred to you and preserved in an automatic system. This system is called Central Depository Bangladesh Limited (CDBL). I will describe this CDBL system in details later.

What is stock exchange?

Stock exchange is a organized place or arrangement where the buyer and seller is brought together so they can buy sale their stocks/share. For example Dhaka Stock Exchange has a electronic trading system called TESA and Chittagong Stock Exchange has an electronic trading system called VECTOR. These two system work as an arrangement to help buy/sale of listed securities.

What is broker?

A broker is an intermediary who works as an media to bring together buyer and seller. And it takes commission...