Stock Market: An Overview

A stock market is usually a form of financial market that deals with buying and selling of corporate stocks, derivatives or other types of securities. These securities might either be listed on a stock exchange or can be bought and sold privately. Stock market investment is quite a popular form of investment nowadays.

Participants of stock market operations vary in size and type and include big hedge fund traders, insurance companies, banks, corporations, governments and individual investors.

Stocks and securities are issued by different governments and corporate entities for the intention of raising funds. They utilize the stock market as a fund-raising platform and it is also a platform for the investors to make investment in securities.

At a time when both the purchasers and sellers in a stock market are institutions instead of individuals, stock market activities become more institutionalized. As a result of the materializing of institutional investor theory, a number of developments have taken place in the stock market activities all over the world.

Stock trading can be done both on a real time basis and a virtual basis. Real time stock trading is performed on trading floors. The technique of physical trading where verbal bids are placed by traders is known as open outcry. Virtual stock trading takes place with the help of computer terminals. It is also known as online trading. Stock markets work as marketplaces for trading of stocks, as well as clearing houses for stock deals. This indicates that stock exchanges are involved in gathering and delivering the securities and they also assure the sellers that they would receive their payments. This is to make sure that there is no default by the buyer or seller.

Stock market performance is dependent on financial sector reforms and consolidation. The growth in global funds flow has contributed towards the upgrading of stock exchanges around the world.

Stock Index

A stock index or stock market index is a means to calculate a segment of the stock market. Numerous indices are quoted by financial services providers or news and are implemented to standardize the performance of portfolios like mutual funds.

Important Stock Exchanges

Following are names of some of the well-known stock exchanges of the world:

• New York Stock Exchange (NYSE)
• Frankfurt Stock Exchange
• Hong Kong Stock Exchange
• Bombay Stock Exchange (BSE)
• Shanghai Stock Exchange
• Tokyo Stock Exchange
• Taiwan Stock Exchange
• NASDAQ
• London Stock Exchange
• Singapore Exchange