The Stock Market

A company can rise money on the stock market in two different ways. It can issue shares or units of its capital, to institutional investors or the general public. Different types of shares or equities are available, but the most common are known as ordinary or common shares. When an investor buys a share, using the services of a specialist company- broker, he or she becomes a shareholder and owns a part of company. Shareholders can make money by receiving dividends, paid as a proportion of a company’s annual profits, and when the value of their shares increases

The stock market - a component of the financial market, in which securities turns. In other words it is a public entity for the trading of company shares at an agreed price; these are shares listed on a stock exchange as well as those only traded privately. The classification of the nature of the stocks markets: 1.  Primary market - a market in which happen the placement of new securities. 2.  Secondary market - the place of main purchase and sale of previously issued asset. 3.  The third covers - the market which covers trade of publicly listed securities outside itself. 4.  The fourth market – it’s electronic trading system of large blocks of securities directly between institutional investors. Historically, there are three models of stock market, depending of the bank or nonbank financial intermediaries’s nature: 1. Non-bank model (U.S.) - non-bank companies represents itself as intermediaries 2. The banking model (Germany) – banks represents itself as intermediaries. 3. A mixed model (Japan) - intermediaries are banks and nonbank companies.

Market participants include individual retail investors, institutional investors such as banks, insurance companies, and also publicly traded corporations trading in their own shares.

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange affords the investors gives them the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate