LoansWhat is the Stock Market, You Ask?
A stock market is a place where everybody can do business because it is public; that is everyone can trade stocks of companies and derivatives at an established price. Stock market plays an important role and this importance can be grouped into five areas.
1. Functions and Purpose. The stock market itself is the source of big and small companies to gain and raise money. Through this, companies or individual investors are allowed to trade and increase their capital by selling some percentage of their stocks. It is also the determinant if the country has a strong and developed economy.
2. Relation of the stock market to the modern financial system. The importance of what is the stock market is that it affects the present financial system of the world. Previously, the financial flow was directly transmitted to the government lending banks but today all financial transactions were made in the financial market.
3. Financial Risk. Investing in the stock market is really risky. The price of stock fluctuates in large scale unlike the bank deposits or bonds that were stable. It affects not only the individual investors but also the economy of the country as well.
4. Behaviour of stock market. So far, the behaviour of stock market is incomprehensible. There are cases, in which the basic factors affect the stock markets behaviour such as the outlook margins and dividends or profits.
5. Crashes of stock market. The stock market crash; that is, there is a sharp plunge in the stock market of its listed share prices of equities. If the stock market crashes it greatly affects the economy growth and its trend.