Monday, December 17, 2007

Stock exchange

A stock exchange, share market or bourse is a corporation or mutual organization which provides services for stock brokers and traders, to trade company stocks and further securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events as well as the payment of income and dividends. The securities traded on a stock exchange consist of: shares issued by companies, unit trusts and further pooled investment products and bonds. To be able to do business in security on a certain stock exchange, it has to be listed there. Trade on an exchange is made by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is completed in the secondary market. A stock exchange is frequently the most important component of a stock market. Supply and demand in stock markets are determined by various factors which, as in all free markets, affect the price of stocks (see stock valuation).

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