Beginners guide for stock exchange

You are new in investments, often listen a term "Stock Exchange", but it is very much ambiguities to you. You need a closure look of it.

What is stock exchange? Stock exchange is an organization who facilitates both - corporations, stock brokers and of course traders. It offers open market for treading of stocks, financial security solutions and various financial instruments. Still looking ambiguities? No problem, check the following example - you went a shopping mall and looking for your good, what you do? If you need meat, they you've to meat shops and ask for the meat you're looking for. On the other hand, if you're looking for cloths, you must go for the cloth section. Stock exchange is similar to that. Different segment of the stock exchange offers different financial solutions for you.

The only difference from ordinary market place to stock exchange is one special middleman who organizes your treading based on their expertise and experience. Those professionals called - "Stock Brokers" apart from organizing the treading, they also offers advice regarding what stocks you can purchase or what to sell. Additionally, they buy and sell on behalf of you. Usually, they play a vital role in stock market.

How stock market works?

Before doing anything you must check the organization where you are going to invest, it must be listed in index. After that they issued the IPO (Initial Public Offering). It is nothing but an initial selling offer in primary market.

Role of a stock exchange:

  • Collect capital from public for a listed business;
  • Help to grow the company;
  • Investment mobilization;
  • Profit sharing;
  • Financial governance of listed companies;
  • Creates investment opportunities for small and medium investors;
  • Responsible for the growth of the economy.

However, it is clear to us when business get money from the marketplace through investors, they will able to gain profit and investors will get their profit accordingly.

How the company listed on stock exchange?

Every country has their own system to get listed on their stock exchange. But most commonly - the company to empanel on the stock exchange must complete three different criteria. Those criteria are - minimum number of shares, minimum cost of shares and company profit details and how older the company is. Those criteria may vary country to country.

Most popular stock exchange all over the world

  • NYSE (New York Stock Exchange);
  • NSE;
  • BSE;
  • London stock exchange;
  • Swiss stock exchange;

Advantages of the stock exchange

Stock exchange is equally vital for all the involved parties' viz. corporations, buyers, sellers and brokers. Opening a public company requires more capital to go for maximum improvements. Whatever reason may be- new product development, enhancing the existing product, opening new branches in new locations or even start a new venture. Stock exchange is the only resource where you can get those financial instruments for best ROI, no matter whether you are small or medium investor. It allows business to get the shortage capital from the public investment, against that, the exchange, rather better to say, the stock market ensures the revenue sharing upon their investments.