The concept of stock exchange originated in the Netherlands and Great Britain during the seventeenth century. Initially, it facilitated investors to buy and sell shares of companies to raise money for overseas expansion.
The term Stock Market is generally used to define the sum of all the stocks and other securities in the market, with the exception of bonds, commodities, and derivatives. That is, a stock market is a corporation or mutual organization put up for bringing together the people and the sellers of stocks and securities.
A major part of the total infrastructure for every single society comes from financial markets. The three main tasks performed by the financial system of the market include:
(a) Transfer of payments in the markets.
(b) Directing the savings to investments with profit so as to utilize in the future Stock Market.
(c) Reducing the economic risks for the members.
The Stock Market is the primary source for companies to raise money. The economic growth of a company depends largely on the price of shares and other assets. The increased share prices are related with increased business investment in the Stock Market.
The economic prosperity of households is also affected by the share prices to some extent. Therefore, the central banks keep an eye on the nature of the market. The market statistics show that in the recent decades, shares constitute a large part of financial assets of households.
The major part of this adjustment in financial portfolios has gone directly to shares but a bargain now takes the form of various kinds of institutional investment for groups of people. As examples in the Stock Market the pension funds, mutual funds, hedge funds, insurance investment of premiums, and so on, the list goes on. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds.
Developed economic nations, like the European Union, the United States, Japan, etc. are running successfully after moving away from government insured bank deposits towards more risky securities.
It is suggested to think seriously and look at the benefits and limitations before dealing in any activity the Stock Market.
The main US markets include the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX) and the National Association of Securities Dealers Automated Quotations (NASDAQ).
The New York Stock Exchange was launched in 1792. It is considered to be the largest and best stock exchange in the country. A company needs to be financially strong and should have leadership quality to be a member of NYSE.
The American Stock Exchange is known as a major exchange for stocks. Though it may seem to be a little riskier but the members earn a lot by investing into it.
NASDAQ was launched in 1971. It is best known for listing the companies that are into technology. Here, you will find many major technology stocks, including Microsoft and Intel.
Every market has its own specialization of the types of stocks. You need to find the best and most suitable out of them.