WHAT IS THE STOCK MARKET?

The stock market – a place where corporations and companies shares are issued and traded. The stock exchange is an essential component of the open global economy.

Equity markets perform two primary functions.

From the standpoint of companies, stock markets provide access to capital, usually in the form of cash. If a company needs to finance a large project, it can sell its shares on the stock market to raise capital, instead of borrowing money from the bank.

From shareholder’s point of view, the stock market provides an opportunity to participate in the growth of the company, as well as quickly convert stock into cash. Two primary ways to realise it:

In a private business, the shareholders, are frequently composed of the founders and original investors who can sell their shares on the stock exchange and reap the rewards for the risk they took in the creation and development of the company.

For investors who own shares of public companies, the stock market allows them to participate in the growth of the company, benefit from the income and the same time without taking the risk of starting its own business.

In the early days of the stock market, shares were traded individually from person to person. Now, almost all stock trades are conducted electronically.

Two of the major stock market in the United States is the New York Stock Exchange (NYSE) and NASDAQ. Examples of stock exchanges in other countries – the London Stock Exchange (LSE), Hong Kong Stock Exchange (HKSE), Euronext and Deutsche Bourse. In Russia – the Moscow Stock Exchange.

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