Stock market
Stock market refers to the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as those only traded privately. The key functions of the stock market include the facilitation of raising capital for companies, providing liquidity for shareholders, and offering a platform for price discovery and the transfer of wealth among participants.
History[edit | edit source]
The concept of the stock market dates back to the 12th century when French courretiers de change managed agricultural debts on behalf of the banks. However, the first genuine stock exchange was established in 1602 by the Dutch East India Company in Amsterdam. Since then, stock markets have evolved significantly, becoming integral to the global economy.
How the Stock Market Works[edit | edit source]
The stock market operates through a network of exchanges, such as the New York Stock Exchange (NYSE) and the Nasdaq. Companies list their shares on these exchanges through a process known as an Initial Public Offering (IPO). Investors buy and sell these shares, which facilitates the efficient dissemination of capital and risk.
Trading is conducted by stock brokers and electronic trading platforms. The price of stocks is determined by supply and demand in the market. This price reflects what investors, as a group, believe a company is worth.
Major Stock Exchanges[edit | edit source]
There are several major stock exchanges around the world, including:
- New York Stock Exchange (NYSE) - United States
- Nasdaq - United States
- Tokyo Stock Exchange (TSE) - Japan
- London Stock Exchange (LSE) - United Kingdom
- Shanghai Stock Exchange (SSE) - China
Types of Stocks[edit | edit source]
Stocks can be categorized in various ways:
- By size: large-cap, mid-cap, and small-cap
- By type: common stocks and preferred stocks
- By style: growth stocks and value stocks
Market Indices[edit | edit source]
Market indices like the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite are used to track the performance of a specific set of stocks, representing a particular segment of the market.
Investing in the Stock Market[edit | edit source]
Investing in the stock market involves buying shares of companies to profit from dividend payments or an increase in share prices. However, it comes with risks, including the potential loss of capital, due to market volatility.
Regulation[edit | edit source]
The stock market is regulated by government agencies to protect investors and maintain fair trading practices. In the United States, the Securities and Exchange Commission (SEC) is the primary regulatory body.
See Also[edit | edit source]
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