buying and selling stocks that trade on a
stock exchange or over-the-counter.stock
also known as equities, represent fractional ownership in a
company, and the stock market is a place where investors can buy
d sell ownership of such investible assets.
if you are confuse the term investibe assets so just don't worry i will be
expaning you what is inestible .INVESTIBELE ASSETS
Financial Assets include cash and bank accounts plus securities and investment accounts that can be readily converted into cash. The are also known as Investable Assets.
An efficiently functioning stock market is considered critical to economic development, as it gives companies the ability to quickly access capital from the public.
The stock market serves two very important purposes.
The first is to provide capital to companies that they can use to fund and expand their businesses.
If a company issues one million shares of stock that initially sell for $10 a share,
then that provides the company with $10 million of capital that it can use to grow its
business (minus whatever fees the company pays for an investment bank to manage the stock offering).
By offering stock shares instead of borrowing the capital needed for expansion, the company avoids incurring debt and paying interest charges on that debt.
The secondary purpose the stock market serves is to give investors –
those who purchase stocks – the opportunity to share in the profits of publicly-traded companies.
Investors can profit from stock buying in one of two ways. Some stocks pay regular dividends (a given amount of money per share of stock someone owns).
The other way investors can profit from buying stocks is by selling their stock for a profit if the stock price increases from their purchase price.
For example, if an investor buys shares of a company’s stock at $10 a share and the price of the stock subsequently rises to $15 a share,
the investor can then realize a 50% profit on their investment by selling their shares.
History of Stock Trading
Although stock trading dates back as far as the mid-1500s in Antwerp, modern stock trading is generally recognized
as starting with the trading of shares in the East India Company in London.
The East India Company
The formation of the East India Company in London eventually led to a new investment model,
with importing companies offering stocks that essentially represented a fractional ownership interest in the company,
and that therefore offered investors investment returns on proceeds from all the voyages a company funded, instead of just on a single trip.
The new business model made it possible for companies to ask for larger investments per share, enabling them to easily increase the size of their shipping fleets.
Investing in such companies, which were often protected from competition by royally-issued charters,
became very popular due to the fact that investors could potentially realize massive profits on their investments.
Company shares were issued on paper, enabling investors to trade shares back and forth with other
investors, but regulated exchanges did not exist until the formation of the London Stock Exchange (LSE) in 1773. Although a significant amount of financial turmoil followed the immediate establishment of the LSE, exchange trading overall managed to survive and grow throughout the1800s.
The Beginnings of the New York Stock Exchange
Enter the New York Stock Exchange (NYSE), established in 1792. Though not the first on U.S. soil that honor goes to the Philadelphia Stock Exchange (PSE) – the NYSE rapidly grew to become the dominant stock exchange in the United States and eventually in the world. The NYSE occupied a physically strategic position,
located among some of the country’s largest banks and companies, not to mention being situated in a major shipping port. The exchange established listing requirements for shares, and rather hefty fees initially, enabling it to quickly become a wealthy institution itself.
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