Stock Market - Sources of Business Finance, Business Economics & Finance Video Lecture | Business Economics & Finance - B Com

what is the stock exchange and how does
it work the stock exchange is a global
marketplace when companies decide to go
public they divide the company into
shares which are floated on the stock
exchange
ie made available on the stock exchange
to buy and sell people who purchase
shares of the company become
shareholders and own part of the company
shareholders unless they earn a
significant percentage of the company
shares are unlikely to have any direct
say on how the company is run but they
will be able to attend shareholder
meetings where the bosses of the company
will present their strategies and plans
for the company going forward these
meetings are also a place where the
bosses are answerable to the
shareholders for bad decisions and poor
company performance depending on the
perceived value of a company the price
of a share will rise or fall if say
Company X has landed a lucrative
government contract then confidence in
company X will rise and the company's
share price is likely to rise on the
other hand if company Y suffers a
setback during the manufacturing of its
product confidence in company Y is
likely to fall and the company's share
price will also fall the value of shares
fluctuate daily and stockbrokers work
the market for their clients trying to
make a profit for them by buying shares
when the prices are low and selling
shares when the prices are high in
relation to the stock market you may
have heard acronyms and terms used such
as footsie Nasdaq Dow Jones S&P 500 etc
these are the names of share indexes and
they measure the value of a section of
the stock market for example in the UK
the footsie 100 is a Share Index
composed of the hundred largest
companies listed on the London Stock
Exchange these companies are often
dubbed a blue chip companies and include
companies such as Barclays easyJet Tesco
and ITV the value of this share index is
an indicator of how well the UK's
economy is doing as a whole so that the
stock exchange in a nutshell is a global
marketplace where shares and other
company securities such as bonds are
bought and sold this is obviously a
simplified explanation but it should
give you a basic understanding of what
the stock exchange is and how it works
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