THE STOCK EXCHANGE AND US

The New York Stock Exchange

Located at 11 Wall Street in lower Manhattan, NY City.

It’s by far the world’s largest stock exchange.

Financial Market

It’s a market place that allows people to buy and sell financial:

Securities (shares and bonds) Commodities (gold, silver, copper) Currencies (euro, dollar)

Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs and fees.

Role of Financial Markets

Financial markets allow :

The raising of capital The transfer of risk The transfer of liquidity

Types of Financial Markets

Capital market which includes the stock market and the bond market

Commodity market which contains precious metal and agricultural

Money market

Role of Stock Markets

Allowing buyers and sellers of stocks to meet Raising capital for businesses Sharing the profit

The Difference Between a Capital Stock and a Bond

Bond: it’s a share of loan, companies can raise money by issuing

bonds. They will have to pay an interest and pay back the bondholders. Capital Stock: it’s the money invested in the business by its

founders.

Put very simply, stocks offer an ownership stake in the company and bonds are akin to loans made to the company.

Why do People Buy and Sell Stocks?

People buy shares because they think that the value of factory will increase and so the value of its shares.

They will have a dividend each year. They can buy shares at a low price and sell them

at a higher price.

Why do Stock Prices Change?

As people buy and sell shares, stock prices can change everyday.

When there is more buying, the stock prices rise. When there is more selling, the stock prices fall.

So, stock prices change due to the imbalance between buyers and sellers.

How Do We Measure the Stock Markets using indices?

We measure the stock market with an index :- CAC 40- Dow Jones- S&P 500

It’s an average of a specific group of stock prices.

Conclusion

We can conclude that stock exchanges have multiple roles in the economy:

- Raising capital for businesses- Mobilizing savings for investment- Facilitating company growth- Creating investment opportunities for small investors- Government capital-raising for development projects- It’s a barometer for the economy