What are Stocks?
Stocks represent a part of the assets and liabilities of a company. In reality people share the ownership. When a company is listed such parties have at all times a value corresponding to the value the market gives the whole company. The equity is found by multiplying the value of each part (stock), by the value the market assigns to each party.
Theoretically when you have a share of a company owns proportion of its assets, liabilities and earnings. In the jargon of the market a stock is called "paper" because before the dematerialization, the shares were securities on paper that changed hands physically.
There are several types of shares, the most common the bearer, preferred, or non-voting. Some companies have available to trading securities conferring more rights, more voting power, or more dividends. Each time the investor must choose which stock to buy and which best serves his interests.
Buying one share, one part of the company, implies a decision of risk because it is subject to the company's management, operational risk, the business sector risk, the country risk, while its maximum loss is restricted to the capital employed in the shareholding.
In case of bankruptcy you should know that shareholders are the last creditors to be compensated, which means that if a company goes bankrupt, you will hardly able to recover your capital.
Investors can choose the number of shares by the amount he wants to apply. However in some stockmarkets there will be restrictions or minimum trading volume. Thus the client should be sticking to these restrictions because the Dif Freedom platform rejects orders that are inconsistent with the requirements of the markets.
Stock prices are formed during the sessions according to demand and supply. In some markets there may be periods of auction for price formation, before, during or after the opening of the markets. In these periods is possible to give orders, but only at the end of the period of consolidation will you know if the order was executed or still pending.
Minimum Price Variation
The minimum price variation of a stock depends on the market is quoted, and it can change from €0.05, €0.01, €0.005, or other.
Stocks may and can be used as collateral when trading with derivative financial instruments. Dif Broker provides in its platform real information on the percentage of collateral that can be assigned to asset classes that require margin to trade.
The Trading Hours of the shares is available in the Dif Freedom platform, ranging from market to market.
Commissions and other costs
The trade of shares is subject to a fee structure that is available in www.dif.pt/web/pt_pt/pricing
Dividend Payments - If you hold shares in a company you shall be entitled to receive the dividends that the company proposes to distribute.
Increase / decrease of Capital – In the event of a capital increase through subscription or incorporation, the client will receive the corresponding rights may be exercised or sold in the market.
Take Over – When this event takes place a holder of shares will have to inform the Dif Broker about the decision to take.
Non Capital Events
Stock Swap - These operations are characterized by exchange of shares of a company by another. The investor is entitled shares in the company under the proposed conditions, but should take into account new trading conditions of the new company.
Stock Split / Reverse Split - Events that theoretically not affect the value of shareholder equity, which will result in an increase or decrease the number of shares adjusted to the new theoretical price of the underlying asset.
Spin-off - In case of spin off of the company, the shareholder is entitled to receive shares in the company, but should take into account the new trading conditions of the new company, that can be different from the previous.