Understanding Stock Market
 

A Stock Market provides facilities for trading stocks and other securities through stock brokers and traders. Other key functions performed by Stock Market includes issuence and redemption of securities and payment of dividends among the share holders.
The securities traded on Stock Market can be categorized into three types,
1. Shares
2. Unit Bonds
3. Trusts

In order to take part in these trading activities, companies need to be listed on Stock Market. The Listing of any company mainly depends upon factors like minimum numbers of outstanding shares, market capitalization and annual income of the company.
As all buying & selling activities are performed at one place, so it is very easy to get latest information about stock price of any company. Such information is very important because factors like Political circumstances, economic conditions & media reports can affect the prices in a very short time.
There are many Stock Markets working in different parts of the world but the most prominent of these include London Stock Market, NewYork Stock Market and NASDAQ Stock Market
From economic point of view, Stock Market plays very important role by performing several financial activities. Major examples of such activities are following,
• Stock Market helps to arrange capital needed for the expansion of company. It can be accomplished by selling shares of the company to the investors.
• It provides opportunities to shareholders for gaining profits by investing their savings and such investments ultimately leads towards mobilization of wealth into different business activities.
• The mobilization of wealth produces higher productivity and becomes prominent catalyst for economical growth.
• Stock Market helps a company for its business growth. The company can be expanded both in terms of volume as well as market share. Many companies acquire or merge with different business units for the purpose of Growth.
• After selling shares to different types of people, owners with different business minds comes together under the same umbrella. They adapt goal oriented approach & direct the management to work accordingly. This approach helps to improve overall management of the organization.
• A Stock Market encourages small investors to become part of large businesses.
• At national level, some mega projects require huge investments for accomplishment. Government gets the amounts needed by selling shares of different national institutions through Stock Market.