IPO, FPO, Dividend & Right Share Explained: A Beginner’s Guide to Stock Market Essentials

Learn the meaning and difference between IPO, FPO, Dividend, and Right Share. Get simple explanations of these key stock market terms to boost your financial knowledge in 2025.

What is an IPO (Initial Public Offering)?

An IPO is when a private company offers its shares to the public for the first time to raise capital. It is listed on a stock exchange, such as NASDAQ, NYSE, or NEPSE.

✅ Key Points about IPO:

• IPO stands for Initial Public Offering.
• It allows public investment and company expansion.
• IPOs are often priced attractively to attract investors.

After an initial public offering (IPO), the company becomes publicly traded.

📌 Example: In 2021, Robinhood launched its IPO, making its shares available to public investors.

What is an FPO (Follow-on Public Offering)?

An FPO is a process through which an already listed company issues additional shares to the public to raise more funds.

✅ Key Points about FPO:

• FPO is also called a Secondary Offering.
• Issued after IPO by already listed companies.
• Used to finance expansion, repay debt, or support new projects.
• Prices may be close to market value.

📌 Example: A company listed in 2020 may offer an FPO in 2023 to raise more money for growth.

 What is a Dividend?

A dividend is the portion of a company’s profit shared with shareholders as a reward for investing in the company.

✅ Key Points about Dividend:

• Can be paid as cash or bonus shares.
• Issued by profit-making companies.
• Not mandatory, but often a sign of a strong company.

Frequency: Annually, Semi-annually, or Quarterly.

📌 Example: If you hold 100 shares and the company announces a $5 dividend per share, you earn $500.

What is a Right Share?

Right Shares are shares offered by a company to its existing shareholders at a discounted rate before offering them to the general public.

✅ Key Points about Right Shares:

• Issued only to existing shareholders.
• Offered at a discounted price.
• Helps raise funds without taking loans.

Shareholders may choose to buy or ignore the offer.

📌 Example: If you own 10 shares, and the company offers a 1:2 rights issue at a 20% discount, you can buy 5 more shares at the lower price.

Comparison Table: IPO vs FPO vs Dividend vs Right Share

Term	Purpose	Offered To	Price	Type
IPO	To raise initial capital	General public	Usually lower	Equity Offer
FPO	Raise additional capital	General public	Market-linked	Equity Offer
Dividend	Profit distribution	Existing shareholders	Fixed/cash/bonus	Income
Right Share	Raise capital from owners	Existing shareholders	Discounted	Equity Offer

Conclusion:

Understanding terms like IPO, FPO, Dividend, and Right Share is essential for anyone stepping into the world of investment. These concepts form the foundation of how companies raise money and reward their investors. Whether you’re a new investor or just exploring financial knowledge, this guide gives you clarity and confidence in understanding stock market essentials.

Ready to take your first step into the world of investing?

Start by understanding these fundamental concepts and build a smarter financial future.

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Author: MD Hasanain Mansuri

Learn Stock Market and Its Fundamentals: A Beginner’s Complete Guide in 2025

New to earning? Learn how the stock market works, how to invest wisely, and build financial confidence from day one. Perfect guide for freshers starting their career and wealth journey.

The stock market may seem intimidating at first, filled with charts, tickers, bulls, and bears. But once you understand its fundamentals, it opens doors to financial growth, passive income, and long-term wealth creation.

Whether you're a complete beginner or someone who has heard about stocks but never dared to invest, this article will simplify the stock market for you, covering its core concepts and why learning about it could be one of the best decisions of your life.

What Is the Stock Market?

The stock market is a marketplace where shares of publicly listed companies are bought and sold. When you buy a stock, you're buying a small piece of ownership in a company. If the company grows, your investment grows with it.

Think of it as a digital bazaar for company ownership, where prices fluctuate based on demand, performance, news, and global trends.

Why Learn Stock Market Fundamentals?

Understanding the fundamentals gives you the power to make informed investment decisions, rather than relying on tips or luck. Here's why it's worth it:

• Informed Decisions: Avoid emotional trading and base your moves on data and logic.
• Wealth Building: Smart investing leads to long-term financial freedom.
• Risk Management: Know how to protect your money from losses.
• Market Awareness: Stay ahead in a world driven by finance and economics.

 Key Fundamentals of the Stock Market

1. Stocks & Shares

A stock represents ownership in a company.

Shares are the units of that stock.

Companies issue shares to raise capital, and investors buy them to earn returns.

2. Stock Exchanges

Platforms where stocks are traded (e.g., NYSE, NASDAQ, NEPSE, NSE, BSE).

These are regulated by government bodies (e.g., SEC, SEBI, SEBON).

3. Types of Investors

Long-term investors: Focused on growth and dividends over the years.

Short-term traders: Profit from daily or weekly price movements.

4. Market Participants

• Retail Investors – Individuals like you and me.

• Institutional Investors – Banks, mutual funds, hedge funds.

• Market Makers – Entities that ensure liquidity by buying/selling at any time.

Important Concepts Every Beginner Should Know

✅ Fundamental Analysis

Evaluates a company's value based on financial statements, industry outlook, and economic conditions.

Key metrics: EPS (Earnings Per Share), P/E Ratio, ROE (Return on Equity), etc.

✅ Technical Analysis

Uses charts and indicators to predict short-term price movements.

Common tools: Moving Averages, RSI (Relative Strength Index), MACD.

✅ Bull vs. Bear Market

Bull Market: Prices are rising, optimism is high.

Bear Market: Prices are falling, fear is dominant.

✅ IPO (Initial Public Offering)

When a private company offers its shares to the public for the first time.

✅ Dividends

A portion of the company's profits is shared with shareholders.

✅ Risk & Diversification

Investing in different sectors and assets to minimize loss.

Never put all your eggs in one basket!

How to Start Investing in the Stock Market

1. Open a Demat and Trading Account with a trusted broker.
2. Set Your Financial Goals – Short-term, long-term, retirement, etc.
3. Start with Blue-Chip Stocks – Reliable, established companies.
4. Invest Regularly (SIP in Stocks) – Dollar-cost averaging works.
5. Stay Educated – Read, learn, and follow credible financial sources.

Common Mistakes to Avoid

• Investing based on rumors or "hot tips"
• Ignoring market research and analysis
• Panic selling during downturns
• Overtrading and expecting overnight wealth

🚀 Ready to Learn More? Subscribe Now!

Investing is not a one-time event—it’s a lifelong journey. And the first step is knowledge.

By subscribing to our platform, you'll gain:

✅ Weekly stock market lessons in simple language

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Author : MD Hasanain Mansuri