The stock market refers to all kinds of public markets which exist in order to issue, buy and also sell stocks which trade on a stock exchange over the counter. Stocks are also known as equities; these represent fractional ownership of a company, and also the stock market is a place where investors can purchase and also sell ownership of such assets. A stock is obviously considered as an asset, and when you own stock, you basically on a fraction of a company. For example, if I purchase stocks of Apple, it means that a part of the company’s stock is owned by me. Purchasing stocks is a way of making money. You can buy stocks at a lower price and sell them when the stock prices are high. This is precisely what a lot of people do in the stock market. This is why you hire stockbrokers. You need to be very vigilant when you do this, because, the stock prices could plummet at any time and you should be incredibly careful of that. An efficiently functioning market is very critical to the development of the economy, and it also gives the company is the ability to access capital from the entire public.
I will not be talking about the purposes of the stock market, and I will also list out some of the important factors about it. Capital investment and income is an incredible aspect of the stock market. You invest capital into a company, when you buy the stock. Your capital is spent purchasing the stock. When you own the stock, it is a very important asset.
You may not know that the stock markets serves to essential purposes. The first is to provide finances to companies so that they can use the funds to expand the business. If a company issues 1 million shares of stock which initially sell for around hundred dollars a share, then that would provide the company with $100 million of capital, so that they can grow the business. With $100 million, you can do quite a bit. When you offer a stock shares, instead of borrowing capital which is needed for expansion, the company actually avoids building up debt and also paying interest charges for the money that they have borrowed.
The second purpose that I would like to mention is that the stock market serves investors as well. These investors are the ones who purchase the stocks. They build opportunities to make profits publicly. When a person sells stock that he owns, it means that he wants money in return for it, obviously. Sometimes you make a profit, sometimes you break even, sometimes you make a loss. It all depends on the price of the stock.