Thursday, August 13, 2009

What is stock market?


The stock market - organized market of security trading with the help of mechanisms which unite the subjects of macroeconomics, having available assets (investors), with the subjects of macroeconomics requiring resources (debtors). The basic subjects of macroeconomics are - households, firms, the State, foreign agents. The uniform model of the stock market functioning does not exist. Each national market has its features. The national stock markets, as well as economics of the separate countries, are the developing structures which modify together with the change of economical and political situation, technologies, regulative measures and appearance of new products.
It is important for the stock market to function effectively and to fulfill the problems of constant economic growth posed to it. The main objective of stock market functioning is the guaranteeing constant investment inflow into the economics in general and particularly into the separate companies by establishing associations between redundant funds' owners (investors) and companies requiring funds (issuers). The stock market is the security trading market. Today it is possible to mark out three basic categories of securities:
stocks
debentures
derivatives
The stock market can be subdivided into exchange and off-exchange by the trade organization. By the kinds of the securities circulating today in the financial markets it is possible to mark out:
State equities market
market of corporate shares
market of local appropriation equities (municipal bonds or State subjects’ bonds)
derived equities (derivatives) market
One of the main advantages of securities trade is choice possibility. If in the money-market we can work only with the limited quantity of currencies, in the stock market we've got the possibility to choose any company, whose stock we would like to buy or sell. In the money-market often there are periods of long consolidation, when carrying out operations is inconvenient enough. In the stock market the quantity of the companies is very great. On the average, the professional trader can trace no more than 30 - 40 papers a day, and make operations only with several stocks. Thus the trader is well familiarized with the companies whose stock he works with.
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