1️⃣ What is BETA in Stock Market Terms?
Beta = Sensitivity of a stock to market movement
Simple Definition
If the market moves 10% and the stock moves 15% → Beta > 1
If the stock moves only 5% → Beta < 1
Formula (Simple)
Beta = Stock Volatility ÷ Market Volatility
Important Truth
High beta gives faster gains — and faster losses.
2️⃣ What is MARKET CAPITALIZATION?
Market Cap = Company’s market value
Simple Definition
Market Cap = Share Price × Total Shares
Example
₹100 share × 10 crore shares = ₹1,000 crore market cap
Important Truth
Big companies move slower, small companies move faster.
3️⃣ What is P/E RATIO?
P/E = Price paid for ₹1 of earnings
Simple Definition
If P/E = 20 → You pay ₹20 for ₹1 profit
Formula
P/E = Share Price ÷ EPS
Important Truth
High P/E means growth expectations, not guaranteed returns.
4️⃣ What is EPS (Earnings Per Share)?
EPS = Profit per share
Simple Definition
Company earns ₹100 crore
Shares = 10 crore
EPS = ₹10
Important Truth
Rising EPS matters more than rising stock price.
5️⃣ What is DIVIDEND?
Dividend = Profit shared with shareholders
Simple Definition
If dividend = ₹5
You get ₹5 per share you own
Important Truth
Good dividends signal stable businesses, not fast growth.
6️⃣ What is COMPOUNDING?
Compounding = Earnings on earnings
Simple Definition
₹1,00,000 at 12% for 20 years ≈ ₹9,64,000
Important Truth
Time matters more than timing.
7️⃣ What is STOP LOSS?
Stop Loss = Pre-decided exit to limit loss
Simple Definition
Buy at ₹100
Stop loss at ₹90
Max loss = 10%
Important Truth
Capital protection comes before profit.
8️⃣ What is VOLUME?
Volume = Number of shares traded
Simple Definition
High price move + high volume = strong move
Important Truth
Price without volume is unreliable.
9️⃣ What is RISK–REWARD RATIO?
Risk–Reward = Loss vs Gain potential
Simple Definition
Risk ₹10 to earn ₹30 → Ratio = 1:3
Important Truth
Even 40% accuracy works with good risk–reward.
🔟 What is MARKET CYCLE?
Market moves in cycles, not straight lines
Simple Definition
Fear → Recovery → Greed → Crash → Repeat
Important Truth
Money is transferred from impatient to patient investors.
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