A Stock Market, Stock Exchange, Equity Market or even Share Market, is an organized and regulated financial market where securities such as bonds or shares are bought and sold at prices governed by the forces of supply and demand.
Stock exchanges may serve as primary markets where corporations, governments, municipalities, and other incorporated bodies can raise capital by by issuing securities. See Initial Public Offering (IPO). They also function as secondary markets (see definition).
Stock Market may impose stringent rules and listing requirements depending on the type of listing required.
Stock Market Purpose
The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace. The exchanges provide real-time trading information on the listed securities, facilitating price discovery.
The stock market is one of the most important ways for companies to raise money, along with debt markets which are generally more imposing but do not trade publicly. This allows businesses to be publicly traded, and 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 enables their holders to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as property and other immoveable assets.
As of December 31, 2019, the total market capitalization of all stocks worldwide traded on Stock Markets was approximately $70.75 trillion.
