Stocks

Notes of investment in a joint-stock company with the right to receive dividend income. The stock itself alone has no value, but because it receives regular dividend income and can be bought and sold on the stock market, it becomes a particular commodity and has a price. The price of a stock is not its face value, not the money expression of the real capital value it represents. The price of a stock is, in effect, the capitalization of dividend income. Other things being equal, the price of a stock depends mainly on two factors, dividends and interest on bank deposits, which are directly proportional to dividends and inversely proportional to interest on deposits. This is expressed by the formula: stock price = dividend / interest rate. For example, if a stock with a par value of ¥100 pays an annual dividend of 10%, i.e., ¥10. And the interest rate on bank deposits is 5%, the stock price is ¥10 : 0.05 = ¥200. In addition to dividends and interest rates, which are the basic factors that determine stock prices, stock prices in the market are also affected by other factors, such as the supply and demand of stocks, price levels, government fiscal, tax, and financial and monetary policies, changes in the economic cycle, as well as political, psychological, and speculative factors. Stocks have the following features: First, non-refundability, holders of stocks, i.e., stockholders, cannot withdraw shares from the company. If a stockholder does not want to continue to hold stocks, he or she can only sell them. Second, liquidity, stocks can be bought and sold, pledged or transferred. Holders of stocks can obtain price difference returns by buying and selling stocks. The liquidity of stocks is also conducive to the transfer of capital to sectors and enterprises with good efficiency. Third, riskiness. The riskiness of stocks mainly comes from the poor operation of the company and the price fluctuation in the stock market.