Stock Market – How Share Prices are Determined?

Stock market is also known as equity or share market. It is the aggregation of buyers and sellers of shares. Shares represent the rights claim of a particular business.

How the Price of Stock is Determined?

You know that share prices always change or move up or down because of its supply and demand. So, stock market prices are determined by supply and demand.

The value of a company is also determined by its market capitalization, which is the share rate multiplied by the outstanding shares.

Where to Buy or Sell Shares?

A place called stock exchange, where you can buy or sell shares. Stock exchange is also called bourse which is a centralized location which often functions as a continuous auction market, with shareholders and companies. A process of buying and selling shares is called trading.

There are lots of companies that have their stock listed on it. So, that the shares are more attractive to many investors. Stock exchange may also act as a guarantor of the settlement and also may cover many types of securities like bonds or derivatives.

Role of Stock Exchange or Bourse

  1. Raising capital for businesses
  2. Mobilizing savings for investment
  3. Facilitating company growth
  4. Profit sharing
  5. Creating investment opportunities for small investors
  6. Government capital-raising for development projects