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Stock Market

The word stock is an adjective referring to any activity or concept linked to the stock market. In this type of institution, financial assets are bought and sold, the shares being the most representative.

From the etymological point of view, stock market derives from the surname Van Der Buersen. This family, belonging to the Belgian nobility, owned a castle in the city of Bruges. This place became a meeting point for large commercial transactions in the thirteenth and fourteenth centuries.

It should be noted that, within the stock market, there aren't only stock exchanges. Thus, we find other entities such as commodity markets where financial options and futures contracts on raw materials are negotiated.

Main characteristics of the stock market

The main characteristics of the stock market are the following:

- It implies a high level of risk for investors because the price of traded goods varies constantly by the law of supply and demand. Thus, this segment offers less certainty, for example, than a savings account that periodically grants the same return. Therefore, agents are expected to enter the stock market with a long-term horizon.
- It allows companies to issue stocks and bonds to acquire third party financing, being an alternative to bank credit.
- Countries usually have a regulatory body of the stock market, which oversees the operations carried out in it.
- If a stock market goes into crisis, it can impact the entire national economy. Even other countries could be harmed by various factors such as trade links. Recall cases like the bubble of the dot com.

Main uses of the stock market term

The main uses of the stock market term are the following:

- Stock market: It's the set of institutions, companies and people that trade stocks, bonds and other financial assets. These can be commodities, currencies, derivatives or stock indices.
- Stock operation: It's that transaction in the stock market from which the investor expects to make a profit. The income may come from the distribution of dividends or the sale of assets.
- Stock index: It's a numerical value that reflects the performance of a group of assets. For example, the Dow Jones indexis calculated based on the price of the thirty most traded industrial companies on the New York Stock Exchange.
- Stock market capitalization: It's a way of valuing a company. The method is to multiply the number of shares outstanding by their unit price, which varies daily. Companies can be classified according to this indicator in small-caps, mid-caps and large-caps.
- Stock broker: It's an intermediary that performs operations with foreign money. His performance is commissioned by a third party. It's also known as a stockbroker.
- Stock market law: It's a branch of corporate law. It's dedicated to the study and design of the norms that regulate the stock exchanges and the financial markets.

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