Stock market is a mass market of securities that historically have been traded through a market or over an exchange. The stock markets are regulated by government authorities, such as the Securities and Exchange Commission (SEC), to help keep it fair and orderly. And there’s even more regulation for the companies who sell their stocks on the marketplace.
Stock market impacts
1,Stock market is an efficient way to allocate capital because it provides investors with quicker access to investment opportunities than they would have if they were required to invest in the business directly, and because it exposes investors to risks that are better diversified.
2,Stock market is a vital part of the economy as it provides a way for companies to raise capital.
3,Stock market brings liquidity into the financial system. Liquidity refers to how quickly a transaction can be made or how easily an asset can be sold on the open market. With stock markets, there’s always someone who wants either cash or securities and vice versa .
4,Stock market is a normal part of the financial landscape but what is different about it is the huge amount of capital that flows in and out.
5,Stock market does not have upside and downside risks: All the investors in stock market expect a steady and reliable return over time.
6,Stock market has several benefits for firms due to which companies issue shares:
7,Issuing stock creates an incentive for managers to perform better (enhance their pay by providing opportunities to generate shareholder value), which increases the returns for stockholders. Investors would normally expect at least one tenth of their equity in the form of dividends from their companies.
8,Raising capital helps firms to expand and acquire new products and services.
9,Raising capital can boost corporate earnings and save them from bankruptcy. It makes the firm more competitive in the market.