A stock market is a place where buyers and sellers of stocks gather, which represent ownership claims on businesses. These may include securities which are listed on a public stock exchange and those only traded privately. The stock market also refers to the collection of markets and exchanges where the issuing and trading of equities, bonds and another sort of securities takes place through formal exchanges or over-the-counter markets. The stock market is also known as Equity market or Share market. The stock market is an important part of a country’s economy. Stock market plays a pivotal role in the growth of the industry and the country that eventually affects the economy of the country to a great extent. The stock market also affects individual businesses by influencing consumer spending and providing the chance for stronger returns on capital costs.
Top 10 Facilities of Stock Market
There are many facilities of Stock Market. Top 10 facilities are being discussed here.
1. Serves as Economic Barometer: The First facility is stock market can be used as a reliable economic barometer in order to measure the economic condition of a country. Whatever changes happen in the country and in the economy, it can be seen in the reflection of the share price. The rise or fall in the share prices indicates the boom or recession cycle of an economy.
2. Safety Transactions: Another facility of a stock market is safety transaction. In a stock market, only the listed securities can be traded and stock exchange authorities include the companies’ names in the trade list only after verifying the soundness of the company. Those companies have to operate within the strict rules and regulations. These ensure safety dealings and transactions through the stock market.
3. Contributes to Economic Growth: It is one of the biggest facilities of a stock market. In a stock market, securities of various companies are bought and sold. This process of disinvestment and reinvestment will help to invest in most productive investment proposals which will lead to economic growth.
4. Common Platform for the Buyers and Sellers: Another facility is stock market plays a role of a common platform for the buyers and sellers of stocks which are listed on the stock market.
5. Enables to Raise Money and Business Expansion: Stock market facilitates in expanding business and raising money. This allows businesses to go public, or raise additional capital for expansion.
6. Continuous and Ready Market for Securities: Stock market provides a continueous and ready market for purchasing and selling of securities. The stock market also acts as an outlet & counter for the sale of listed securities.
7. Investor Education: Stock market facilitates providing vital information to the investors on their websites. Advertisements also being provided in the newspaper and business magazines from the stock market what should be done and what should not be done in investing which create awareness program. This facility enables investors to become aware of stock market investment and make prudent investment decisions.
8. Encourages Capital Formation: Encouraging to form capital is also included in stock market’s facility. Stock market helps to accelerate the process of capital formation. It also creates the habit of saving, investing and risk taking decisions among the investors. In addition, it also acts as a safe & profitable investment.
9. Facilitates Bank Lending: Stock market provides facility to the banks in giving loans to the customers against corporate securities. As banks easily know the prices of quoted securities through the stock market, this gives convenience to the owners of securities as well.
10. Facilitates Public Borrowing: Stock market serves as a platform for marketing government securities which enables a government to raise public debt easily and quickly.
From the above discussion, we can simply say that stock markets are open markets which trade in financial assets. There are a number of major stock exchange markets around the world and each of these plays an important part in determining the overall economic condition.