Stock Market- Basic Information
The stock exchange is the capital market’s secondary tier. It is the place where the sellers and buyers trade the existing securities. The stock market is the meeting place for sellers and buyers. These could be agents, individuals, brokers, etc. Demand and supply decide the commodity price. It comes under a regulated authority which ensures that all the activities conducted are legal. Similarly, cryptocurrency market is the place where the sellers and buyer meet to deal in digital currency. However, the cryptocurrency is market different from the cryptocurrency market as it is not controlled by any central authority. The trading is done through various trading platforms like the Bitcoin code software and all the transactions are monitored through the blockchain technology.
Functions of the stock exchange
Marketability and liquidity- One of the important factors of the stock market is that it offers high liquidity. The assets could be sold instantly and you could convert it to cash any time you wish. The market is continuous and the investors could reinvest or divest any time he wishes.
Safety- The stock exchanges are strictly regulated and governed by the government. Every transaction is required to occur within the given legal framework. This gives an assurance to investors that the stock market is a safe market to invest their funds.
Price determination- The demand and supply is the only way in which the price gets determined. This process of price determination happens through the constant valuation of the securities. The share price could be tracked through the index known as Sensex.
Contribution to the economy- The stock market deals only with the securities that have been issued already. But the securities get sold and resold continuously. It allows the funds to get mobilized and channelized rather than sitting idle. It helps in boosting the economy of the country.
Speculation- Everyone would have heard that the stock market is a speculative market. Even though it is true, the speculation is done within a legal framework. Healthy speculation is necessary for the determination of price and liquidity. The stock market offers us that platform.
Equity spreading- The stock market makes sure wider ownership of the securities takes place. It helps in educating the common people about the benefits and safety of investing the fund in the stock market. It ensures smooth functioning and better quality of the transactions. The idea behind the stock exchange is to spread the ownership and get more people to participate in it.