What Is A Stock Market Or A Stock Exchange

A stock or equity market is first of all a place where buyers meet sellers to exchange their goods, in this case - stocks, also known as securities for the money. In modern times, those places where trading is done and where securities are listed are actually a companies, just like the ones that are traded on the exchanges. The whole world stock market was estimated to be around 36 trillion US dollars based on the data from 2008.

The stock market or stock exchange, as we said, is a place where stocks are listed and traded. In former days, those stocks were just a pieces of paper that represented a part of the ownership in company. Today, those pieces of paper, also known as stock certificates, are in electronic form and can be issued in paper form only on the request.

The largest stock exchange in the world, by market capitalization based by stocks listed on them, is New York Stock Exchange better known as NYSE. Other exchanges in the United States are American Stock Exchange or AMEX and NASDAQ. 

Other important stock exchanges are in England where is the London Stock Exchange is located. In Asia we have Tokyo Stock Exchange, in Canada there is the Toronto Stock Exchange, in Paris the Paris Bourse, in Germany the Deutsche Borse (former Frankfurt Stock Exchange).


Importance Of Stock Exchanges: 

The stock market is one of the most important ways for companies to raise money to expand and grow their businesses. This allows businesses to be publicly traded and to raise additional capital for expansion by selling shares to the general public. Liquidity that exchanges provide give an investors a possibility to quickly buy and sell securities and with less risk. 

It’s wide known that if the stock market is on the rise it is considered that economy is up and booming. That’s the reason why is it considered stocks market to be a leading indicator of a country's economic strength and development.

Rising share prices, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption. For that reason, Central banks, which I’al cover in the future posts, keep an eye to the stock market prices and if prices rise to much as in ’90s, it can lead to the stock market crash.

Stock exchanges are also the clearinghouses for each transaction, which means that they collect and deliver the shares and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty cannot make the payment.
 

Let's go now to the New York Stock Exchange Or NYSE...