TRADING HISTORY
OF THE STOCK IMPORTANCE OF THE STOCK
BEHAVIOR OF THE STOCK STOCK EXCHANGE ROLE OF STOCK EXCHANGE
AMERICAN STOCK EXCHANGE AUSTRALIA ST EXCHANGE
LONDON STOCK EXCHANGE BOMBAY STOCK EXCHANGE
KUWAIT STOCK EXCHANGE NYSE HONG KONG STOCK EXCHANGE
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Function and purpose
The stock market is one of the most important sources for companies to raise
money. This allows businesses to go public, or raise additional capital for
expansion. The liquidity that an exchange provides affords investors 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.
History has shown that the price of shares and other assets is an important
part of the dynamics of economic activity, and can influence or be an
indicator of social mood. Rising share prices, for instance, tend to be
associated with increased business investment and vice versa. Share prices
also affect the wealth of households and their consumption. Therefore,
central banks tend to keep an eye on the control and behavior of the stock
market and, in general, on the smooth operation of financial system
functions. Financial stability is the raison d'être of central banks.
Exchanges also act as the clearinghouse for each transaction, meaning that
they collect and deliver the shares, and guarantee payment to the seller of
a security. This eliminates the risk to an individual buyer or seller that
the counterparty could default on the transaction.
The smooth functioning of all these activities facilitates economic growth
in that lower costs and enterprise risks promote the production of goods and
services as well as employment. In this way the financial system contributes
to increased prosperity.
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