What is the Stock Market?
The stock market is a marketplace where buyers and sellers come together to trade shares of publicly listed companies. It plays a vital role in the global economy by enabling companies to raise capital and allowing individuals and institutions to invest in those companies. When a company wants to raise money for expansion, it can issue shares through an Initial Public Offering (IPO). These shares then become available for trading on the stock exchange.
There are two main components of the stock market: the primary market, where new shares are issued, and the secondary market, where existing shares are bought and sold among investors. Major stock exchanges around the world include the New York Stock Exchange (NYSE), NASDAQ, London Stock Exchange (LSE), and Bombay Stock Exchange (BSE).
The value of stocks can fluctuate based on factors such as company performance, economic indicators, political events, interest rates, and market sentiment. Investors buy stocks with the hope that their value will increase over time, allowing them to earn a profit. Some also receive dividends, which are portions of a company’s profits shared with shareholders.
Overall, the stock market serves as a barometer for the economy, reflecting investor confidence and the financial health of companies. While it offers opportunities for wealth creation, it also involves risks, making knowledge and strategy important for success.