The term stock market refers to various exchanges in which shares of public companies are bought and sold. Such financial activities can conducted through formal exchanges and over-the-counter (OTC) markets operating under a set of regulations.
The “stock market” and “stock exchange” are often interchangeable, and stock market traders buy or sell shares on one or more stock exchanges that are part of the overall stock market. Major US stock exchanges include the New York Stock Exchange (NYSE) and the Nasdaq.
The stock market helps corporations raise money to finance operations by selling shares and building and maintaining the wealth of individual investors.
Companies raise money in the stock market by selling ownership stakes to investors. These equity holdings is known as stock shares.
By listing shares for sale on stock exchanges that make up the stock market, companies gain access to the capital they need to operate and expand their businesses without going into debt. In exchange for the privilege of selling shares to the public, companies are require to disclose information and give shareholders a voice in how their business is run.
The stock market aims to provide a place to buy and sell fractional ownership in a publicly traded company. It distributes control of some of the world’s largest companies among millions of individual investors. And the buying and selling decisions of those investors determine the value of those companies.
The market allows buyers and sellers to negotiate prices. This negotiation process maximizes fairness for both parties by providing both the highest possible selling price and the lowest possible buying price at any given time. Each exchange monitors the supply and demand of the shares listed there.
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