Stock Exchange

A stock exchange is a specialized marketplace where investors can engage in the buying and selling of various securities such as shares, stocks, debentures, and gilt-edge securities, forming an integral part of the capital market.   The key functions and significance of the stock exchange include facilitating the trading of securities, aiding companies in capital […]

A stock exchange is a specialized marketplace where investors can engage in the buying and selling of various securities such as shares, stocks, debentures, and gilt-edge securities, forming an integral part of the capital market.

 

The key functions and significance of the stock exchange include facilitating the trading of securities, aiding companies in capital raising, determining daily valuations of shares and securities, serving as an economic indicator through quoted share prices, assisting government fundraising efforts, safeguarding investors against fraud, enhancing the administrative standards of companies, generating employment for brokers and clerks, providing information to investors, and serving as a benchmark for evaluating company performance.

 

Operators in the stock exchange include brokers (stockbrokers), jobbers, and authorized clerks. Various types of securities traded on the stock exchange include shares, stocks, debentures, bonds, and gilt-edge securities issued by the government, known for their safety and considered risk-free investments.

 

Speculators in the stock exchange include bulls who anticipate rising prices for potential gains, bears who sell securities expecting price declines to make a profit, and stags who purchase new issues from public limited companies with hopes of selling them at a profit once quoted on the stock exchange.

 

Methods of achieving the quotation of shares on the stock exchange include offering for sale, offering for subscription, introduction, and placement. The second-tier securities market (SSM) was introduced to provide a platform for small and medium-sized companies that cannot meet the stringent conditions of the main stock exchange.

 

Terminologies associated with the stock exchange include blue chips, which represent shares of large, well-known companies with a reputation for stability and growth potential, right issue, involving the offer of new shares to existing shareholders, and Cum-Div (Cum Dividend) and Ex-Div (Ex Dividend), indicating whether the purchaser is entitled to or excluded from dividends, respectively.

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