Lesson 1: Important Fundamental terms
📚 Scenario
Understanding fundamental concepts is crucial for evaluating a company’s performance and potential in the stock market. These metrics provide insights into the company’s financial health and market valuation, helping investors make informed decisions.
Key Points
- Market Capitalization: The total value of a company’s outstanding shares, representing its market size.
- Dividends: A portion of a company’s earnings distributed to shareholders.
- Earnings Per Share (EPS): The portion of a company’s profit allocated to each outstanding share.
- Price-to-Earnings (P/E) Ratio: A valuation ratio comparing a company’s share price to its earnings per share, often used to gauge whether a stock is over- or under-valued.
🎥 Video Guide
✍️ Practice Questions
- What does market capitalization indicate about a company?
- How do dividends benefit shareholders?
- Why is Earnings Per Share (EPS) an important metric for investors?
- What does a high or low P/E ratio imply about a stock’s valuation?
Think about these questions to reinforce your understanding of stock market basics.
Lesson 2: Industries and sectors
📚 Scenario
It is essential to understand how companies are classified based on the products or services they offer. Knowing the industry a company belongs to helps investors assess its performance in relation to macroeconomic and microeconomic factors.
Key Points
- Industry: Classifies companies based on their specific business focus.
- Sector: A broader classification that groups companies in similar lines of business.
- Impact of Economic Factors: Different industries react differently to economic changes, like recessions, government policies, or global events.
- Diversification: Avoid concentrating investments in a single industry to mitigate risk.
🎥 Video Guide
✍️ Practice Questions
- How are industries and sectors different from one another?
- Why is it important to understand the industry a company operates in?
- How can macroeconomic factors impact different industries differently?
- Why is diversification important when investing in stocks?
Think about these questions to reinforce your understanding of stock market basics.