What is a Stock Market?

For those who are in the financial business, stock market is a familiar word. A stock market is important to an economy as it is a good source of capital for business. The stock market activities are covered by news media everyday but some of us will just ignore this because we think that it is not relevant to our affairs. We may not be familiar with the word itself, the concept, and the importance of stock market.

What is a stock market? Stock Market is an organized place or institution where shares, stocks, and bonds are bought and sold or can also be traded at an agreed price.

What is a stock? A Stock is a document that represents ownership in a corporation. These are also called equities. Example of equity is your car, which is one of your assets. Portions of your business are also an example of equity. The investment return of stock is determined two ways - first, the corporation may pay a dividend to the shareholders; second, the market value (or price that others are willing to pay) of the shares of stocks may go up or down. Together this profit is considered to be the "total return". The average return over a ten-year period for stocks (or equities) is 10-12%. The stocks are listed and traded on stock the exchanges, which are entities of a corporation, or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together

The word market pertains to the activity of buying and selling. This market can be a private or public market. Stock Market is also called “Equity Market”. Thus, the basic function of a stock market is to recycle capital from savings into investments. It enables public or private companies, governments, and local authorities to raise capital by selling securities for investors.

Obviously, Stocks and stock market are very important to us. We should familiarize ourselves and update ourselves regarding stock market by reading the news and articles about it. Learn the basics of stock trading because who knows someday we might find ourselves embroiled in its intricacies.

For free stock market basics and access to some shocking forex videos, check out Learn Stock Market.