Stock market - game of profit and loss
A stock market is a public market for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The Dutch East India Company in the year 1602 brought out first shares on the Stock Exchange of Amsterdam and it was also the first stock exchange to bring out bonds and stocks in the History of Stock Market. The stock market is often considered the primary indicator of a country's economic strength and development.
Purpose of stock market: The stock market is one of the most important sources for companies to raise money.
- The purpose of the stock market is to allow companies to raise capital by selling stocks to the public for the benefit of the company and the investor.
- A growing company requires fund to expand, and this brings lots of hurdles. Mostly companies choose the option of loan however always bank is not ready to lend a big chunk of money required by the company. To overcome these problems owners of small businesses issue stock. In exchange for giving up a tiny fraction of control, they are given cash to expand the business.
Functioning of stock market:
- Primary market function: Companies raise long-term funds for their operations by issuing shares (and other securities) to investors.
- Secondary market function: Where investors can buy and sell those shares at current prices as determined by other investors in the market. The stock market primarily deals with the secondary market.
- After a Company has listed and issued shares to investors, the shares can then be sold to other investors in the stock market.
- Private individuals can buy shares directly through an adviser at a stock broking firm, or they can place their money with a fund manager or financial institution.
- The buying and selling of shares takes place on the electronic trading system with staff at stock broking firms.
- When you buy goods or services from listed companies, you are contributing to their growth and providing an opportunity for higher profits.
Major stock markets worldwide:
- New York Stock Exchange, USA
- Canada Stock watch, Canada
- Mexican stock exchange, Mexico
- Frankfurt Stock Exchange, Germany
- Sydney Futures Exchange, Australia
- Australian Stock Exchanges, Australia
- London Stock Exchange: Daily Price Summary, United Kingdom
- Bombay Stock Exchange, India
The NYSE is perhaps the principal stock exchange in the world. Not all companies' stocks are traded in the NYSE, but it is the trading home of some of the most impressive and well-respected companies in the world.
(Sources: economywatch.com, greekshares.com)
