What is a Stock Exchange?
A stock exchange serves as a marketplace where buyers and sellers come together to trade stocks. These exchanges play a vital role in maintaining liquidity, transparency, and fairness in the stock market. Companies list their stocks on these exchanges to provide investors with a platform to buy and sell shares. Major stock exchanges, such as the New York Stock Exchange (NYSE) and NASDAQ, operate as regulated entities, ensuring that trading occurs in an organized and secure environment. Stock exchanges use electronic trading systems to match buyers with sellers, executing transactions at prevailing market prices. The presence of stock exchanges facilitates capital formation, allowing companies to raise funds by issuing shares to the public.
What is Stock Market and How it Works?
A stock, also known as a share or equity, represents ownership in a company. When an individual purchases a stock, they essentially become a partial owner of that company, entitled to a share of its profits and voting rights in certain matters. Common stocks are the most prevalent type, providing shareholders with voting rights and potential dividends, although not guaranteed. Preferred stocks, on the other hand, offer priority in dividend payments but often lack voting rights. Stocks are traded on various stock exchanges, where investors buy and sell these ownership shares. The value of a stock is determined by factors such as the company’s performance, economic conditions, and market sentiment, making the stock market a dynamic and ever-changing financial ecosystem.
Table of Content
- Types of Stock
- What is a Stock Exchange?
- Stock Market Indexes
- Why do Companies Issue Shares?
- How are Share Prices Set?
- How to Invest in Stocks?
- How does Inflation affect the Stock Market?
- What is Stock Market Volatility?
- Advantages of Stock Market
- Disadvantages of Stock Market
- Conclusion
- FAQs
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