what is stock exchange

Hello guys i am back with another useful and informative topic and today we are going to talk about stock exchange.I will try my best to keep it simple because this blog is specially for beginners.We will see the all sides of stock exchange market and will watch how people invest and make profit from stock market Everyday, stocks are exchanged and traded in numerous stock markets around the world. The liquidity they bring are a vital component of economic growth. However, we seldom stop and think about the vital role that a stock exchange plays. I have listed some of the major things that are facilitated by the stock exchange so without wasting anymore time lets move on the topic.

What is stock exchange?

Stock Market is the place where Shares, Debentures, Mutual Funds, Derivatives, and other securities are purchased and sold. Shares are primarily bought and sold through the Stock Exchange and in India, BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) are two main stock exchanges.


What is share?

Share means a unit of ownership that represents an equal proportion of the Company’s Capital. When you buy a company’s shares, you become the shareholder of the company. For example, if a company issues a total of 1 lakh shares and you have purchased 10 thousand shares from it, you become a 10% shareholder of that company. You can sell these shares in the stock market whenever you want.

How its work?

First of all, companies bring the IPO (Initial Public Offering) by listing their shares in the stock exchanges and issue the shares through IPO at a specified price. Once an IPO is completed, the shares are assigned to the shareholders who bid for them. Subsequently, these shares come into the market and are bought and sold by investors through stock exchanges and brokers.

How stock price set:

When Company issues an IPO, it sets the price of the share but once the IPO is completed, there is no role of the company in determining the value of the shares, and the value of shares is freely based on demand and supply of that company basis how that company evolves over a period of time.

If the number of shares sold in comparison to the Shares purchased is reduced, the prices of Shares will increase and if the number of shares purchased is less than the Shares sold, then the share price will decrease.

After being registered on the stock market, companies have to periodically share all the important information with the investors and on the basis of this information, investors value the companies. Depending on this evaluation, the decrease in the Demand and Supply of shares results in the price change of the shares in either direction.


How to Buy Share

Keeping these rules in mind when you decide to invest in the Stock Market, the next step is to open a Trading and DEMAT account with a stockbroker.

Demant Account

When we open a bank account, all the money that we earn either through monthly salary or any other means gets transferred to the registered Bank account. Just like that all the securities like Share, Bonds, Government Securities, Mutual Funds, etc. are all stored in the electronic form in your Demat Account.

So  i hope You understand what is stock market and how its work in next Article we will cover some other important topic related to stock exchange And if you want to download pakistani stock exchange app you can download it from the link mention below.

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