What is the stock market?
As with most things in life, this question has both a short and an in-depth answer. The short answer is a collection of companies and investors that are constantly buying and selling shares of corporations’ stock. Every company traded on the stock market has agreed on a certain amount of shares of their stock to be sold to an investment community in return for cash to finance their businesses. Once the stock has been issued initially by the investment bank, the corporation issuing the stock has already received an agreed upon sum of cash for the investment bank to have the right to sell the company’s stock to investors. Theoretically, the per share price fluctuations of a corporation’s stock may have no direct correlation to the business’ performance or profitability. However, investors are betting on the fact that the corporation whose stock was purchased will financially perform well and produce a return for the investor.
A stock market is a place where buyers and sellers trade company stock for a set price. In the financial world, “stock” simply means a supply of money a company has raised from individuals or other organizations. If you buy stock, then you own a part of a company. This part is called a “share.” People who own stock are referred to as “shareholders” or “stockholders.” Shareholders hope the companies they invest in go on to earn money, because they will then receive a share of the profits. If the company they buy stock in loses money, however, then the stockholders won’t even regain the money they invested. Shareholders usually have voting rights, typically one vote for every share they own. Many companies have yearly meetings where the shareholders can vote on company issues. Stockholders also receive annual or quarterly reports that let them know how the company is doing financially. When a corporation wants to sell shares of its company, it lists its stock on an exchange. The New York
The stock market brings together people who want to sell stock with those who want to buy stock. Companies sell stock on the stock market to get money to help their business grow and improve. How do you buy and sell stock? • When you buy stock in a company, you become a part owner. In other words, you buy yourself a share of the company. • Most investors buy and sell through stockbrokers. Stockbrokers are trained and registered to sell stock and bonds. • Stockbrokers used to meet to buy and sell stock in a building called a stock exchange. Now, all trades are done electronically. Each stock exchange focuses on certain kinds of investments. Examples: In Canada, investors can buy stocks on the Toronto Stock Exchange (TSX) and the TSX Venture Exchange. The Montreal Exchange doesn’t sell stock, but it does sell more specialized investments. How do stock prices get set? • Before a stock can be bought or sold, the buyer and seller have to agree on a price. • Using a computer network, stockbr
by Holly Hartman The word stock simply refers to a supply. You may have a stock of T-shirts in your closet, or a stock of pencils in your desk. In the financial market, stock refers to a supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow. A market is a public place where things are bought and sold. The term “stock market” refers to the business of buying and selling stock. The stock market is not a specific place, though some people use the term “Wall Street”—the main street in New York City’s financial district—to refer to the U.S. stock market in general.
Generally speaking the Stock Market refers to equities where actually stocks and derivatives are traded. In the U.S.A. we think the Stock Market is New York City. In fact there are major Stock Markets in Hong Kong, Hamburg, London, Paris, Canada, Japan and others that influence one another and impact the world Stock Market. The New York Stock Exchange may have stocks listed that are listed on other major Stock Markets. A company headquartered in Amsterdam may be listed on multiple stock exchanges. Many foreign organized companies are listed on the New York Stock Exchange. There is a tremendous value for foreign companies to be listed on an exchange in the U.S. The exposure and knowledge of a foreign company has a face on the New York Stock Market. An example would be a China stock Baidu. These information and search technology company has grown in leaps and bounds since it was introduced on the New York Market. Sometimes all it takes is making a good impression to stock analysts and a
