The word "stock market" refers to open markets where stocks can be issued, bought, and sold for cash or for other securities that trade over-the-counter or on a stock exchange.
Alternatively said, it is a place where shares of publicly traded firms are traded. In an initial public offering (IPO), corporations sell shares to the general public on the primary market in order to raise money. The stock market is a marketplace where investors can buy and sell ownership of such investable assets. Stocks, often referred to as equities, represent a portion of ownership in a corporation.
How does the stock market work?
Market participants can trade shares and other qualifying financial products in a secure and regulated environment with low to no operational risk in the stock market. The stock markets serve as primary markets and secondary markets, and operate in accordance with the regulator's prescribed guidelines.
Types of Stock Market:-
Primary Market- A primary market is where new securities are purchased. Companies, governments, and other organizations frequently go to an exchange to get financing through debt- or equity-based instruments. Underwriting groups, which are made up of investment banks, promote primary markets by establishing an initial price range for a particular instrument and supervising its sale to investors.
The main market's defining feature is that securities traded there are bought directly from issuers.
Secondary Market- Investors can buy and sell securities they already own in the secondary market. Although stocks are also sold in the primary market when they are originally issued, it is what most people refer to as the "stock market." Secondary markets include the national exchanges, such the NASDAQ and the New York Stock Exchange (NYSE).
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