The stock market, also known as the equity market or share market, is a platform where buying, selling, and trading of publicly-listed company shares, bonds, derivatives, and other financial instruments occur. It plays a crucial role in the economy by facilitating capital formation, enabling companies to raise funds for expansion and investment, and providing investors with opportunities to grow their wealth.
Here are some key aspects of the stock market:
- Stock Exchanges: Stock exchanges are the primary venues where trading of securities takes place. Examples of major stock exchanges include the New York Stock Exchange (NYSE), Nasdaq, London Stock Exchange (LSE), Tokyo Stock Exchange (TSE), and Shanghai Stock Exchange (SSE).
- Listed Companies: Publicly-listed companies issue shares or stocks, which represent ownership stakes in the company. These shares are traded on stock exchanges, allowing investors to buy and sell them based on market demand and supply.
- Investors: Individuals, institutional investors, and other entities participate in the stock market as buyers and sellers of securities. Investors include retail investors, such as individual traders, as well as institutional investors like mutual funds, pension funds, hedge funds, and insurance companies.
- Stock Indices: Stock indices, such as the S&P 500, Dow Jones Industrial Average (DJIA), and FTSE 100, track the performance of a specific group of stocks or the overall market. They serve as benchmarks for evaluating the performance of investment portfolios and assessing market trends.
- Market Participants: In addition to investors, other market participants include stockbrokers, who execute trades on behalf of clients; market makers, who facilitate liquidity by buying and selling securities; and regulators, who oversee and regulate the functioning of the stock market to ensure fair and orderly trading.