Stock Market
Stock Market
The stock market is an important part of the economy of a country. It is the primary marketplace where corporations can raise funds. A stock market consists of primary and secondary stock markets. In the primary stock market, companies sell shares to the public to raise funds. The main stock market instruments are common stock and preferred shares. New stock issues are divided into public offerings (IPOs) and seasoned offerings (SEO). An IPO involves a firm selling its common stock to the public for the first time. SEOs are new shares offered by firms that already have stocks outstanding. The process of underwriting involves formulating the method used to issue securities, PRICE and SELL new securities. The secondary stock market is where investors trade can further be divided into auction and dealer markets. The market participants in the stock market are retail investors, mutual funds and other institutional investors, banks, insurance companies, and hedge funds.