Stock Market: Definition, Its Role And How Does It Work
Nowadays, many of us are literate about the world of investment. The purpose of investing is different depending on each person’s, but most of them invest as a form of long-term savings.
However, there must be some of you who are still confused and ignorant about investing. One thing often mentioned in investment is the stock market. What is stock market? Where to buy stocks? Or maybe how about the workings of the stock market?
What are Stocks?
Stocks are a person’s ownership rights over a company obtained through the delivery of a share of capital. Besides being considered as the owner, you also get the right to supervise the company.
The shares themselves are shaped like sheets of paper that you can buy in lots, where 1 lot consists of 100 shares. You can visit the stock market, if you want to make a purchase.
What is the Stock Market?
The stock market is a place to meet, interact and carry out buying and selling transactions between sellers and buyers of stocks.
Apart from sellers and buyers, the stock market also involves several parties, namely institutions and workers who have an interest in the shares they buy and sell.
There are also the main parties involved in a stock market, including investors, speculators, and also the government. In addition, there are also Issuers, Underwriters, and Brokers who have interests in the stock market.
Of course, each party has its own goals, but there is one main goal that they both want to achieve, that is to get the maximum profit through technical and fundamental analysis of the stock market.
Stock Returns
Apart from the information above, there are also terms that you need to know when investing. The term is Stock Return.
Stock Return is the difference between the selling price and the buying price of shares plus dividends. So, the greater the stock return you get, the bigger your profit is.
How Does the Stock Market Work?
There are two types of stock markets that you can find, namely the primary and secondary stock markets. For more details, see the following explanation:
1. Primary Stock Market
The Primary Stock Market is a forum used by companies to sell their first issued shares to the general public or investors, or another term is IPO (Initial Public Offering). Or for companies that are already registered, they can offer additional shares for a certain period of time.
In addition to selling shares, companies can also buy back these shares, which will then be removed from the stock exchange list under certain conditions.
2. Secondary Stock Market
Contrary to the primary stock market, the secondary stock market has the duty to prepare share sales facilities for previously registered shares.
Closing
That’s some basic information what is stock market and other information details that you need to know. Hopefully this information is useful for those of you who are just starting for investment.
