Before dealing with stock exchange and stock market some questions have to be asked like:
- What is stock exchange?
- What is the purpose of stocks and shares?
- What are the world’s stock exchanges?
These questions are really helpful when you want to invest in a business or market. To get answers to all these questions to make clear some basics.
What Does Exchange Mean?
Before going in depth of stock exchange, we have to understand what an exchange is. The exchange is a market or an organization that trades stocks, bonds, and commodities. Buyers and sellers gather at a specific place to discuss reports, shares and other rules. These rules are settled by “Exchanges”. The traded company will be then known as “listed”.
Over The Counter:
There also exists some shares which fail to meet stock exchange. They are known as OTC or Over The Counter. The only problem with OTC is that they are a bit risky as they do not follow security rules.
The Exchange Will Provide A Secondary Market For Buyers
Shares business work by selling and buying. The ones buying shares are definitely going to sell it someday for:
- Payment of Taxes.
- Payment of College fee.
- Buy a house.
- Go on a journey, Etc……
But, this is not possible unless the seller is sure to whom they can sell their shares. This is known as “secondary market” where they re-sell the shares. The stock exchange is very important in such a scenario as it is not feasible for anyone to go to every single person. You have shares in form of a certification which you sign under the supervision of experts. This is all done under Exchange. The exchange will provide a secondary market for buyers very easily.
The Risk Involved In Stocks:
The only disadvantage of stock is that you are unsure of the prices. Maybe for the share you bought on $500, will be sold in $200 causing great loss. Also, you do not know the person buying your shares. He may be a fraud or an old man who can betray.
15 Major Stock Exchanges In The World:
There are 15 major stock exchanges in the world listed on 31 Jan 2015:
- The New York Stock Exchange
- London Stock Exchange.
- Tokyo Stock Exchange.
- Shanghai Stock Exchange.
- Hong Kong Stock Exchange.
- Shenzhen Stock Exchange.
- TMX Group.
- Deutsche Borse.
- Bombay Stock Exchange.
- National Stock Exchange of India.
- SIX Swiss Exchange.
- Australian Securities Exchange.
- Korea Exchange.