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Frequently Asked Questions (FAQ's)

The stock market is a collection of exchanges and markets where stocks (shares of publicly held companies) are bought, sold, and issued. It provides a platform for investors to trade shares and other securities, such as bonds and derivatives. Key functions of the stock market include:

  1. Capital Raising: Companies issue new shares to raise capital for expansion, innovation, and operations.
  2. Price Discovery: The stock market helps determine the fair price of a company’s stock through supply and demand dynamics.
  3. Liquidity: It offers investors the ability to quickly buy and sell shares, providing liquidity to the market.
  4. Investment Opportunities: Investors can buy shares to gain ownership in companies and potentially earn returns through dividends and capital appreciation.
  5. Economic Indicator: The stock market often reflects the overall economic health and investor sentiment.

A stock exchange is an organized and regulated market where securities such as stocks, bonds, and other financial instruments are bought and sold. It provides a platform for companies to raise capital by issuing shares to the public and for investors to buy and sell those shares in a transparent and orderly manner. Key features and functions of a stock exchange include:

  1. Listing of Securities: Companies must meet specific requirements to list their shares on a stock exchange. Once listed, their shares can be traded publicly.
  2. Trading Platform: The exchange provides a marketplace for buyers and sellers to trade securities, using either electronic systems or physical trading floors.
  3. Price Discovery: Stock exchanges facilitate the process of price discovery, where the prices of securities are determined based on supply and demand.
  4. Regulation and Oversight: Stock exchanges operate under strict regulations to ensure fair trading practices, protect investors, and maintain market integrity.
  5. Liquidity: Exchanges provide liquidity, allowing investors to quickly buy or sell securities at market prices.
  6. Market Information: They offer valuable information such as stock prices, trading volumes, and financial reports, helping investors make informed decisions.

In Bangladesh, the two primary stock exchanges are the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE). The DSE is the larger of the two and plays a significant role in the country’s financial market by facilitating the trading of shares and other securities.

The Dhaka Stock Exchange (DSE) in Bangladesh operates on a set schedule for trading hours. The regular trading hours are as follows:

Pre-Opening Session: 9:45 AM to 9:55 AM (Bangladesh Standard Time, BST)

Opening Session: 9:55 AM to 10:00 AM (BST)

Continuous Trading Session: 10:00 AM to 2:30 PM (BST)

Closing Session: 2:30 PM to 2:40 PM (BST)

Post-Closing Session: 2:40 PM to 3:00 PM (BST)

During these hours, investors can place orders to buy and sell securities. The pre-opening session is for order collection, the opening session is for order matching and price discovery, and the continuous trading session is when the actual trading occurs. The closing session is for finalizing the day’s trades, and the post-closing session allows for additional processing and reporting.

The DSE is open Sunday through Thursday and is closed on Fridays and Saturdays, as well as on public holidays in Bangladesh.

A stock broker is a licensed financial professional or firm that facilitates the buying and selling of securities on behalf of investors. Stock brokers act as intermediaries between buyers and sellers in the stock market, providing access to exchanges where securities are traded. Key functions and services provided by stock brokers include:

  1. Order Execution: Brokers execute buy and sell orders for stocks, bonds, and other securities on behalf of their clients.
  2. Investment Advice: Many brokers offer investment advice and recommendations based on market analysis and the client’s financial goals.
  3. Portfolio Management: Some brokers provide portfolio management services, helping clients build and manage a diversified investment portfolio.
  4. Research and Analysis: Brokers often provide research reports, market analysis, and insights to help clients make informed investment decisions.
  5. Access to Markets: Brokers provide clients with access to various markets and exchanges, enabling them to trade a wide range of securities.
  6. Customer Service: Brokers offer support and services to clients, including answering questions, handling account inquiries, and providing educational resources.

In Bangladesh, stock brokers are licensed and regulated by the Bangladesh Securities and Exchange Commission (BSEC). They are essential for retail and institutional investors who want to participate in the Bangladeshi capital market, primarily through the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE).

A stock represents ownership in a corporation and constitutes a claim on part of the company’s assets and earnings. When you buy a stock, you purchase a piece of the company, known as a share. There are two main types of stock:

Common Stock: Common stockholders have ownership rights, including voting rights on corporate matters (such as electing the board of directors). They may receive dividends, which are portions of the company’s profits distributed to shareholders. Common stockholders are last in line to claim assets if a company is liquidated.

Preferred Stock: Preferred stockholders typically do not have voting rights, but they have a higher claim on assets and earnings than common stockholders. Preferred shares often come with a fixed dividend, which must be paid out before dividends to common shareholders. In case of liquidation, preferred shareholders are paid before common shareholders but after debt holders.

Stocks are traded on stock exchanges, such as the Dhaka Stock Exchange (DSE) and the Chittagong Stock Exchange (CSE) in Bangladesh. Investing in stocks can provide returns through capital appreciation (an increase in the stock’s price) and dividends. However, stock prices can be volatile, and investing in stocks carries the risk of losing some or all of the invested capital.

In Bangladesh, the financial market offers various types of securities that investors can trade. These include:
    • Equity Securities (Stocks):
      • Common Stock: Represents ownership in a company, giving shareholders voting rights and a share in the company’s profits through dividends.
      • Preferred Stock: Provides no voting rights but offers fixed dividends and a higher claim on assets than common stock in the event of liquidation.
    • Debt Securities (Bonds):
      • Government Bonds: Issued by the government to finance public projects and manage monetary policy. Examples include Treasury Bills (T-bills) and Treasury Bonds.
      • Corporate Bonds: Issued by companies to raise capital for business operations, offering periodic interest payments and returning the principal at maturity
    • Mutual Funds:
      • Open-Ended Mutual Funds: Allow investors to buy and sell shares at any time at the fund’s net asset value (NAV).
      • Closed-Ended Mutual Funds: Have a fixed number of shares traded on stock exchanges, and their market price can differ from the NAV.

The SME (Small and Medium Enterprise) market in Bangladesh is a dedicated segment within the broader capital market designed to facilitate the growth and development of small and medium-sized enterprises by providing them with access to capital. This market aims to support SMEs in raising funds through equity financing, which can be crucial for their expansion and development.

The Alternative Trading Board (ATB) in Bangladesh is a specialized platform established by the Dhaka Stock Exchange (DSE) to facilitate the listing and trading of securities of small and growing companies that do not meet the requirements for listing on the main exchange. The ATB serves as an alternative avenue for these companies to access capital markets and raise funds from investors.