The stock market provides a platform for buying and selling shares of companies from "summary" of Financial Markets and Institutions, Global Edition by Frederic S. Mishkin,Stanley G. Eakins
The stock market is a place where investors can buy and sell ownership shares of companies. When a company decides to "go public" and issue stock to the public for the first time, it typically does so through an initial public offering (IPO). In an IPO, the company raises capital by selling shares to investors. These shares represent ownership in the company and entitle the shareholder to a portion of the company's profits. Once a company's stock is trading on the stock market, investors can buy and sell shares in that company through a stock exchange. Stock exchanges provide a platform for buyers and sellers to come together and agree on a price for the shares. The most well-known stock exchanges in the United States are the New York Stock Exchange (NYSE) and the Nasdaq. Investors participate in the stock market for a variety of reasons. Some investors buy stocks in the hope that the price will increase, allowing them to sell the shares at a profit. Others buy stocks for the dividends that companies pay out to shareholders. Still, others invest in stocks as a way to diversify their portfolios and spread out their risk. The stock market is a key component of the financial system, as it allows companies to raise capital and investors to put their money to work. By providing a platform for buying and selling shares of companies, the stock market plays a crucial role in the economy. Investors can easily buy and sell shares of companies they are interested in, and companies can access funding from a wide pool of investors. This dynamic interaction between companies and investors helps drive economic growth and innovation.
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