Can anyone briefly explain the working of a stock market? Please tell me about its functioning.
How does a Stock Market work?
- Posted:
- 3+ months ago by Soniya Ch...
- Topics:
- work, market, working, stock, stock market
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Answers (5)
Each publicly-traded corporation is represented by a given number of shares, specified in their bylaws. People buy and sell shares (or portions of shares) using the stock market that a corporation is listed on. At any moment, the value of a share is based on what it's been selling for. Price is driven by supply and demand. Usually, people buy and sell at whatever the current price is, but you can also say you want to buy when the price drops below some value, or sell when the price climbs above some value.
At any particular point in time, Stock price is a function of supply and demand. i.e. Sell orders and Buy orders. The decision to buy or sell is influenced by so many factors.
Stock Exchange doesn't influence price of a stock. Neither does it decide an opening price nor the closing price. Stock Exchange just provides a platform where you can place the orders. All it has is an order matching rule. Orders are matched in such a way that a buy order is matched with best priced sell order and vice versa.
Stocks in an organization give you an offer of the organization's future benefits consequently for the capital contributed. A securities exchange is the place financial specialists meet to purchase and offer shares. When you choose to purchase shares in an organization you're purchasing a bit of that organization. Purchasing stocks is compatible with purchasing offers. The estimation of that offer additionally relies on upon what number of shares that organization has issued. This implies low share cost isn't generally an indication of a hot purchase.
In a securities exchange, 1000s of organizations are recorded and these organizations (called open organizations - as they have given out their shares to regular open) pay a charge to the trades, alongside a guarantee to give extremely essential data to the business sectors. Consequently they get a chance to put their organization in the share trading system's board and can get cash from individuals going to the business sector. The first run through an organization's stock shows up on money markets' board is called an IPO (Initial Public Offer).
The stock market is a place where you can buy and sell stocks and bonds. If you buy shares of stock in a company, you become part owner of the company. As an owner, you share in the profits made by the company. The price of a share (or stock) goes up and down. When you sell a share, you can make money or lose money. There are many companies that sell stocks, like Ford Motors and McDonald's. Though all best stocks to buy are not alike. Ford has been around for many years and has made lots of money for its shareholders. McDonald's has also grown quickly but you don't know how long it will take for profits to grow again for its shareholders. So, when deciding where to invest your hard-earned money, figure out how the company may do in the future for its shareholders."