The stock market, also known as the equity market or share market, is a place where buyers and sellers of stocks (also called shares) come together to exchange ownership claims on businesses. The stock market includes securities listed on a public stock exchange, as well as stock that is only traded privately, such as shares of private companies which are sold to investors through equity crowdfunding platforms. The stock market serves two important purposes: first, it helps companies raise money from the public by offering shares for sale, which can be used to fund and expand their business. Second, it provides a place where anyone can buy and sell fractional ownership in a publicly traded company, distributing control of some of the worlds largest companies among hundreds of millions of individual investors.
Some key features of the stock market include:
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Stock exchanges: These are venues where stockbrokers and traders can buy and sell shares (equity stock), bonds, and other securities. Many large companies have their stocks listed on a stock exchange, which makes the stock more liquid and thus more attractive to many investors.
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Types of stocks: There are two main types of stocks: common stock and preferred stock. The main difference between the two is that common stocks give shareholders the right to vote on company matters and participate in the growing earnings of the company while preferred stocks don’t. Preferred shares may come with a higher fixed dividend payout.
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Efficient price discovery: The stock market creates efficient price discovery and efficient dealing, allowing buyers and sellers to transact at a fair price with a high degree of liquidity and transparency.
The U.S. stock market is regulated by the Securities and Exchange Commission (SEC) and local regulatory bodies. The stock market is an important part of the global economy and affects the financial well-being of individuals, businesses, and governments around the world.
