Stock market is a place where trading of stocks takes place. There may be times when the stock market is referred to as “Wall Street”, to indicate the stock market in United States in general.
If a company wants to expand, employ more number of workers, launch new products and build factories, it will require money. The company can take a loan. By doing so, it will owe money to lending institutions. However, by issuing stocks, the company can get the fund that is necessary for the development of the company. Stocks cannot be issued by anyone. A business corporation has the right to issue stocks as it is empowered with a legal status.
Shareholders/Stockholders: When you are buying stocks, you are actually buying a part of the company. Each part of the company is referred to as a share. It means you have a share in the company. For instance, if a company issues 100 shares and you buy 5 of them. It implies that you own 5% of the company. People buying stocks are known as stockholders or shareholders.
In the event the company earns good profit, the same is shared among the shareholders. If the stocks of a company do really well, the stockholder can earn more than the amount he would have earned had he kept the money in his bank account.
Shareholders have the right to vote. Their votes help in electing members of the Board of Directors and also in taking decisions like whether the company whose stocks he is holding should opt for acquisitions or not etc. One shareholder has the right to give only one vote. However, a shareholder who owns more number of shares will have a greater say as compared to a shareholder who has just a single share in the company.
Stock market and the economy:
Stock markets are closely related to the economic equilibrium of a country. A market is said to be bullish when the economic condition of the country is very good, unemployment level is low and inflation is also low. A market is said to be bearish if the economic condition of a country is very bad. When the markets are bearish, the price of stocks gets reduced to a great extent.
Related Resources:
Indian Stock Market – BSE and NSE behave as synonyms of Indian stock market. The history of Indian stock market is almost the same as the history of BSE. Get recent updates of Indian Stock Market at PaisaWaisa and know recent NSE & BSE sensex news. In the year of 1965, BSE got fixed acknowledgment from the Indian Govt. NSE comes 2nd to BSE in terms of popularity. BSE and NSE represent themselves as synonyms of Indian stock market.
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