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First and foremost, this is a good time to state that stocks, shares and equities are all interchangeable terms! Which term is most popular varies from country to country.
Shares represent part ownership of a company. Traditionally, a share has represented a portion of a company available for investors to purchase. In today’s world, fractional shares are becoming increasingly popular. Shares can be bought and sold, meaning they have a monetary value.
In an investment sense, shares represent ownership of part of a firm's future earnings. This explains the impact of future performance projections on daily share prices.
There are many things they may be referring to, but in most cases, they will simply be referring to the Market Capitalization (or "Market Cap") of a company. The definition of market cap is the number of shares in the company multiplied by the last traded price of that company's shares on the stock exchange. It is a mechanical calculation. Let’s say that a share’s latest trade was of just one share, which happened to trade at 10% lower than where it had been trading all day. The company would be deemed to have lost 10% of its value!
Shares are issued initially for numerous reasons:
A stock market is a marketplace where shares are bought and sold. There is no one stock market, but rather, numerous stock markets located in different parts of the world. Examples include:
At a stock exchange, investors can buy and sell shares, exchange-traded funds, and more. The exchange functions as a marketplace, with buyers looking to buy a stock for as little as possible and sellers trying to sell for as much as they can get away with.
When trading on a stock exchange, we have next to no idea who we are buying from or selling to as we are operating through the secondary market. Without a stock exchange, we would have to trade with our close associates!
Companies must meet strict criteria and (usually) have excellent financial records to be listed on a stock exchange.
A stock market index measures the performance of a stock market or a subset of a stock market. When you hear about a stock market being up or down, it’ll reference the performance of a stock market index. Investors use stock market indexes to compare prices with previous market performance. Below are some examples of stock market indexes:
STOCK INTRODUCTION. COMPLETED. ✅
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