Original Image By:Angelo Giordano
What Is The Stock Market?
The term stock market refers to a collection of exchanges and markets where investors are able to buy and sell stocks and bonds issued by companies. The stock market is one of the main components of a free-market economy.
Stock is a term used to described units of ownership that a company is willing to sale to investors in return for capital(money) from the investor.
With stock, investors get a "piece of the pie" or part ownership of the company where they have the potential to make money from the way the stock performs on the market. This means if the price of the stock increases that investors make money of their investor while they lose money if the price of the stock goes down.
Image By:OpenClipart-Vectors
Where Is The Stock Market Located?
The Stock Market as we know is comprised of various exchanges all over the world, but where exactly are these exchanges located?
The most well known exchange in the world is the New York Stock Exchange(NYSE) located in New York in the United States. The second biggest exchange known as the Nasdaq is in the United States as well, but has no physical location like the NYSE. Other major locations of stock exchanges are in London and in Tokyo.
Image By:Jarmoluk
What is An Index?
An index is a collection of stock that investors use to gauge how the market is performing overall through the trading day.
Some of the more well know and most followed index are the Dow Jones Industrial Average(DJIA), the NASDAQ Compsite Average and the Standards and Poor's 500(S&P 500).
These indexes are all from the United States and all give a representation of the United States economy with the DJIA and the S&P 500 being the top two indexes that determine the economy.
What Do Companies Do With Stock?
Companies that are willing to issue stock to investors so that they can use the money gained to improve the company.
The money can be used to develop new products, buy new equipment, modernize building or for whatever the company see fit to do with the money.
Image By:PublicDomainPictures
How The Stock Exchange Works Video
Video By:Kurzgesagt – In a Nutshell
Wrap Up
The stock market is an important part of the free-market economy system and is used to benefit not only companies, but also investors of all backgrounds by allowing everyone involved to make money from buying and selling ownership of companies.
Works Cited
Articles
Investopedia Staff. (n.d.). Stock Market.
Retrieved from http://www.investopedia.com/terms/s/stockmarket.asp
The Mint. (n.d.). What is the stock market?
Retrieved from http://www.themint.org/kids/what-is-the-stock-market.html
Images
Giordano, A. (2015). New York Stock Exchange [Photograph]. Retrieved from https://pixabay.com/en/new-york-stock-exchange-money-631577/
Jarmoluk. (2014). Stock Exchange Clocks [photograph]. Retrieved from https://pixabay.com/en/business-time-clock-clocks-257911/
OpenClipart-Vectors. (2013). Pie Chart [photograph]. Retrieved from https://pixabay.com/en/pie-chart-chart-data-presentation-154411/
PublicDomainPictures. (2013). Money Stacks [photograph]. Retrieved from https://pixabay.com/en/packs-pile-money-finance-currency-163497/
Videos
Kurzgesagt – In a Nutshell. (2013, November 28). How The Stock Exchange Works (For Dummies) [Video file]. Retrieved from www.youtube.com/watch?v=F3QpgXBtDeo