Wednesday, 15 April 2015
what to know about the stock exchange
The stock exchange is a form of exchange that provides investors with a platform to buy or sell stocks and securities. Stockbrokers and traders, can buy or sale stocks, bonds etc in the stock exchange, it also provide other financial facilities for services like issue and redemption of securities and also the payment of dividends and profits .
Stocks, bonds, units trust, pooled investment and other securities are traded on the stock exchange, the stock exchange function as an auction market with investors buying and selling securities at a central location called the floor of the exchange.BP daily share prices
For a stock to be traded on the floor of the exchange the stock has to be listed with the exchange, and to trade a stock an investor need stockbroker to execute his order, but modern technology has made it possible for investors to trade stock online. Before trading on the exchange an individual must become a member.
The stock are introduced into the exchange by an initial public offer in the primary market and are subsequently traded in the secondary markets, stock exchange is the most important component of the stock market, the price of stocks in the stock market are affected by the power of demand and supply, other factors also contribute to the rise or fall of stocks in the stock exchange, factors like quarterly performance, company management team etc.
Stock can also be traded outside the stock exchange and this called issue over –the-counter, this is how derivatives and bonds are traded in the market. Stock exchange is the one of the most important component of global security market.
Trading software like electronic communication center, alternative trading system and ‘’dark pools’’ has taken away most of the activities of the stock exchange.
The stock exchange has many roles in the economy; it raises capital for businesses by selling its stock in the exchange to the public.
Stock exchange provide a means of borrowing capital to firms through bonds and other securities, thereby providing an alternative to bank loan. Stock exchange help capital intensive companies to go public, these companies need large capital at the start ups and by issuing its stocks to the public it generate the necessary capital required.
There are listing requirement before any company can be listed in the stock exchange, each exchange has its peculiar listing requirement, the world major stock exchange has their particular listing requirement of which each firm must meet before it get listed.
Below are various stock exchanges and their listing requirement:
· Newyork stock exchange: to get listed on the newyork stock exchange a company most have at least offered 1 million shares with total worth of $100 million and most have make profit of at least $11 million in the past three years.live gold prices
· Nasdaq stock exchange: a company must have offfered 1.25 million shares with total worth of $70 million and must have made not less than $11 million in the past three years.
· The London stock exchange. A company must have market capitalization of £700,000, three years of audited financial statement , minimum float capital of 25%, and sufficient working capital for 12 months.
Labels: stocks and share