There are different types of stocks that trade in the stock market. You can get all the information about trading in the share market by login into https://www.dailyreckoning.com.au/ website where you will get help in knowing the market well. The classification of the stock market is done on several bases. Here we will discuss all of those sources.
1. Division grounded on stock classes: A basic factor on which classification of the stocks is based on the shareholder’s voting right. Some of the stocks are there that does not give the right to the shareholder to vote in the annual meeting where all the decision about company management and other important issues are taken.
2. Based on market capitalization: The Company’s market capitalization is responsible for this classification who is the whole shareholding of an organization. The calculation is done on the basis of the current price of each share with total shares in the market. In market capitalization there is a number of different types of stocks:
- Large Cap stock
- Middle Cap stock
- Small-Cap Stock
3. Based on ownership: Based on ownership there are three kinds of stocks that the financier can do themselves which provides them variant rights and growth strength.
- Preferred and common stock
- Hybrid Stock
- Embedded derivative stock
4. Based on dividend payment: On the basis of dividend payment it is divided into two categories:
- Growth stock: It includes the reinvest of earnings to earn more.
- Income Stock: It gives a high dividend which means high income.
5. Based on fundamentals: The investors who consider that the price of a company’s share should be equal to its internal share value. They compare the investment price, each share income, profit, etc. to reach the internal price of a share. It is divided into two categories:
- Overvalued share
- Undervalued share
6. Based on risks: Depends on the share price fluctuation in the market. It is of two types:
- Beta stock
- Blue-chip stock
7. Based on trends: This classification is based on the earnings of a company on basis of the stock price. These are of two types:
- Defensive Stock
- Cyclical stock
Conclusion: The stock market is divided on the basis of several reasons. Their classification is based on the type of share. It is a vast industry on which the economy of any country depends majorly.
