A stock exchange or stock market is a hub where traders buy and sell company shares. Companies want stock listed on the stock exchange. Typically, a major corporation has its stock listed on several exchanges worldwide.
What Shares Stand For
Shares are a small part of a company, meaning a buyer owns a small piece of that particular business when someone buys shares in a company. Share prices based on a whole lot of different things. The key factor influencing the price of the shares is the balance sheet between supply and demand.
You need to how it affects if too many buyers decide to buy a stock then that stock’s price goes up and if there are more sellers then that share’s price goes down.
Stock Market Functions
There are 3 functions of the stock market, namely the pricing of securities, the safety of transactions, and contributing to economic growth.
First is the pricing of securities. On the basis of supply and demand factors, the stock market provides the platform for obtaining the securities values.
The securities are valued higher as there is more demand, so the securities prices are determined, more demand the higher the securities value. Therefore investors will know the value of their investments; securities valuation is very useful.
Second is the safety of transactions. Each stock exchange is a market organized and has its own law. Each member must obey the rules likewise businesses must also obey the strict rules and regulations. This will ensure the security of sale and purchase through the stock exchange.
The third is to contribute to economic growth. Many corporate securities are bought and sold in a stock exchange, investors are able to buy securities for profit, and can sell if money is required.
These investment processes encourage investors to invest their money in industries, thus allowing for economic growth.