Question

1.Explain the preferred and ordinary stocks?

2.What is a market? And what are the characteristics of a good market?

Answer 1

PART 1-

Preferred Stock-

Preferred shares are also known as preferred stock or preference shares. These are the securities that represent ownership in a corporation, and that have a priority claim over common shares on the company’s assets and earnings. Holders of preferred stock are given priority in dividend payment over common stock.

Ordinary Stock-

Ordinary stock is an equity share that is subordinate to all other types of equity. The holder of ordinary stock participates in an entity's profits only after all other types of equity shares have participated. The holder of ordinary stock may receive dividends declared by the issuing company's board of directors, and is also entitled to vote for company directors and other matters.

PART 2-

NOTE:- The question is confusing. Market can be physical market as well as share market. But since you have asked for characteristics of good market also, i am assuming that it is the physical market.

Market-

A market is a place where two parties can gather to facilitate the exchange of goods and services. The parties involved are usually buyers and sellers. The market may be physical like a retail outlet, where people meet face-to-face, or virtual like an online market, where there is no direct physical contact between buyers and sellers.

Characteristics of Good Market -

1) Size of the market is of great influence. The bigger the market size, the better it is.

2) Urgency of requirement is another characteristic that defines a good market. The more urgently people need the products in that market, the better.

3) A Good market has high pricing potential. The higher you can charge per product, the better.

4) In a Good market, there is low cost of acquiring new customers. The easier and cheaper it is to get new customers, the better it is.

5) A Good market has low cost and ease of delivering the product or service. The cheaper and easier it is to deliver your product, the better it is.

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