Stocks

Private Stock Exchanges play a significant role in the economy! In fact, most of the server's economy is located within The Exchange.

What are Private Stock Exchanges?

Stock Exchanges are where financial securities are traded. Financial securities are tradable financial assets such as bonds, shares and derivatives. While investing in securities offers the potential for great returns, it also carries varying levels of risk. As far as risk goes:

• Bonds are least risky and offer the least return and loss.
• Shares are moderately risky and can offer moderate returns and losses.
• Derivatives are very risky and can offer huge returns and losses.

To spread the risk of investments, investors should look to diversity their portfolio by investing in multiple companies and industries. Players can invest in private stock exchanges by joining their Discord servers, however, the procedure for buying and selling stocks may vary. Keep in mind:

• Rules and regulations for exchanges may vary.
• Your investments aren't always guarunteed if the company ceases to exist.
• You may not be able to sell your shares and realise your gains.
• Transfer and transaction fees may vary between exchanges.

If you would like to get involved, there is currently one private stock exchange on the server:

• The Exchange

What are Bonds?

A bond is a (generally) fixed-income form of security and the "safest" form of investment. Essentially, through purchasing bonds, investors lend money to companies and governments (issuers) for a specified interest rate and period. The issuer then pays back the investor through interest (coupons) and a large payment (face value) at the end of the period (maturity). Key characteristics to look for when evaluating a bond are:

• Face Value/Par Value: The value of the payment at maturity, and the value used when calculating coupons.
• Coupon Rate/Interest Rate: The rate of interest the issue will pay on the face value. On DC, this is generally a monthly percentage.
• Coupon Dates/Interest Frequency: How often the coupons will be paid.
• Maturity Dates: The date at which the bond will mature and the issuer will pay the investor the face value.
• Issue Price: The price at which the issuer originally sells the bond at.

Bonds can be bought and sold after issue between investors (secondary market). It is important to note the market value of these on the secondary market may not be the same as the issue price, particularly if some coupons have been paid, or the bond is close to maturity.

Other factors to consider is the creditwortiness of the company. i.e can it pay back the bond.

• If a company has an assigned credit score, evaluate this against the coupon rate.
• While companies and governments can both issue bonds, government bonds carry reasonably less risk.

What are Shares?

Shares represent units of ownership within a company. When you purchase shares from a company, you become an investor and a partial owner.

Selling shares enables companies to grow and develop. For example, the injection of money from selling shares may allow a company to expand, making both the company and its shares more valuable. This appreciation earns the investors a return.

Some companies also pay out monthly dividends. This is a regular payment to shareholders and offers another way to make a return. For example, if a company announces a $20 per share dividend, every shareholder will receive $20 every share they own.

Typically, the principle of “buy low” and “sell high” applies when trading shares. Players often invest in companies when share prices are low and sell them when they rise. A simple way to see if a companies share price is "low" or "cheap", compare the share's market value against its book value using the values in the company's balance sheet, or if the share price aligns with how you expect the company to run in the future. Company financials are posted monthly at various dates.

There are two major categories of shares:

• Preferred Stock: They are associated with a fixed dividend, similar to how bonds operate. Preferred stock shareholders have, as the name suggests, priority when distriubting company income. They have dividends paid out before common shareholders do. Preferred stock has no voting rights.
• Common Stock: Common stock signifies a share in ownership and is the most common form of share. Common stock may be divided into several classes but the details such as voting rights are up to the individual firm.

Currenty, there are 9 companies traded publicly on The Exchange:

• Acadia Group ($AG, $AG.A)
• Archeon ($ARC)
• Dark Matter Aerospace ($DARK)
• Echelon Holdings ($EC)
• Elite Real Estate ($ERE)
• HIVE Bulk Goods ($HIVE)
• Sigma Strategies Corporation ($SSC.A, $SSC.B)
• TollesCo ($TCO.A)
• Virtus Group ($VIR, $VIR.B)

ETFs

ETFS or Exchange Traded Funds are an affordable way to invest in an index or pool of shares, achieving diversification with minimal effort. Most ETFs are passively traded and managed by their fund manager to follow the market. They are particularly useful if you are nervous about investing or want to passively invest your funds.

What are Derivatives

Derivatives, derive their value from another financial security that facilitate hedging strategies. They should be evaluated on a case-by-case basis and should only be purchased for a specific reason. These are not publicly traded on the exchange and can be purchased from some financial institutions.