The main functions of the stock exchange are as follows:
- Financial Investment Forum: It is a place where people who seek financing, such as companies and institutions, and people who want to invest meet from depositors. Therefore, it is like a process of borrowing which is beneficial to both parties. It is a particularly protected operation due to special supervision.
- One of the indicators of the national economy: It is important to understand the position of the company, especially the large companies in the country, because it is important for the economy, because most of the major companies in any country in the world put their shares on the financial market and indicate indicators of their shares changing. Their financial condition and comprehensive understanding of all company stock changes provide an indication of economic conditions .
- Ways to increase wealth: As we said before, the stock exchange is a market for business transactions, so it is a place where depositors can work and invest. In this case, it is a reason to increase wealth and increase income. Providing employment If you enter any stock exchange in the world, you will be surprised by the size of its employees and the size of the brokerage company’s employees, and this hides a large number of employees and you cannot see them, which helps to provide job opportunities and reduce the unemployment rate. A way to finance the company without having to borrow interest from the bank The process here is very simple, when the company needs financing, they subscribe to their own shares. According to the subscription, the company sells the shares of its company for cash, and this type of financial return does not charge interest and borrows from the bank albeit for others, giving up part of the ownership.
How the stock market works:
Various stock exchanges are a reflection of the economy of any country in the world, and their prosperity is a sign of economic strength and cohesion.
Stock Exchange Parties:
- the seller :He is the owner of the goods offered for sale (from the definition of the stock exchange, we find that the offered goods are raw materials or securities).
- Buyers :They are investors who want to invest their money in trading operations in the stock market.
- stock market: It is the market or the place where the commercial exchange of buying and selling takes place and it is subject to the supervision of the state.
- brokerage firms: They are the companies licensed to carry out commercial operations within the market. It is not possible for persons or natural individuals or the rulers to carry out this operation on their own. Rather, these companies must be authorized to carry out these operations and the types of companies are (broking companies – portfolio management – investment companies).
How the stock market works
Like any other business process, this is a purely business process based on buying and selling. Investors who want to carry out this process need to appoint a brokerage firm to deal with it, and the investor sends written orders in case they need to buy with various orders from time to time. Enter or sell, whether it is a spot order all day, or the order remains open until canceled.
Sellers and buyers do not know the identity of the other party, the whole process takes place within the framework of the brokerage firm, and for these many reasons the most important thing is to protect the credibility of the business process.
The stock market is a regulated market in which bonds or shares are exchanged for securities within a legal framework, so individual rights and capital will not be lost. Buying shares on the stock exchange generates returns or benefits, and whether they are shares or bonds, the difference between them is as follows:
Income or interest on shares is divided into two parts: the first part is the distribution of profits, when the company is profitable, each shareholder receives a profit from the shares of the company he owns, and the second part deals with the distribution of profits. The company’s share price increases to increase the demand for it and the possibility of selling at a value higher than its nominal value.
Bond income or interest is the same as regular loans at a fixed rate of interest, so the fixed interest must be paid, and at the end of the loan period, individuals receive the principal amount paid to obtain these bonds.
The most important stock markets:
- Food market (wheat – sugar – corn and other foods.
- The currency market: (US dollar – Japanese yen – Euro – Swiss franc – Canadian dollar – Australian dollar – New Zealand dollar and other currencies).
- The stock market (stock-bond market).
- Raw materials market: (oil – copper – cotton).