Definition of stock market:
Stock market stock known under the name of the stock exchange (in English: Stock Market), it is the market which regulates the purchase and sale of securities, such as stocks and Bonds, by way of follow-up factors controlling the associated with the nature of supply and demand within the financial market.
Of the other definition of the stock market is a place, physical or virtual where the range of sellers and buyers with a view to achieving trading of securities between them, and this market to market; they are the primary market issued by its securities for the first time, and the second that is used for securities that have been previously released.
The genesis of the stock market:
You think the city of Venice is the first place seen traded securities
In 1300, the use of panels containing information about the various documents submitted for registration, in the year 1531 appeared the stock exchange the concept is more pronounced in the city of Antwerp in Belgium, has attracted the brokers for the implementation of commercial transactions and the group debt on the individuals.
In the 1600’s with the advent of the East India Company that contributed to the strengthening of the idea of the financial market by giving governments the French, British and Dutch police documents that help in the collection of the dividends of their own, and with the passage of time appeared the first Stock Exchange in London in 1773, but it was restricted in terms of dealing with stocks, unlike the New York Stock Exchange, which was applied to equity trading in the market.
Contributed to developments in communications technology and the internet in the Twenty-First Century to impact directly on the nature of trading in the financial markets, resulting in conversion of financial transactions to electronic trading, which has resulted in a change in the investment world, has become the customers using the computer systems in the application of the sales and purchases of Private Securities; in order to gain access to execute trades between parties in a easy.
The characteristics of the stock market :
Features of the stock market a range of characteristics; namely:
Returns and risk: of the basic characteristics of the stock market; it features of assets, such as stocks, with a high degree of risk, and affect the changes in the economic environment, the nature of the competition existing between the companies on the proportion of sales and profits, which help in determining the prices of these stocks.
Changes: are the fluctuations in the financial markets, the show as a result of changes in the prices associated in a range of events, such as: government reports economic earnings of the enterprise, so burn successful investors in the financial markets on control of the changes and progress; through the development in investments within their portfolios.
Liquidity: is the provision of stock market margins that explain differences between buyers and sellers of securities by way of encouraging these markets to combine facilities and businesses from all over the world, also contributed to Information Technology in the promotion and support of trading in the financial markets; through the publication of financial information for investors and participants in these markets.
The global: characteristics of the nurses own stock markets; it brings together all the companies of the European, American and Asian with, which helps in promoting institutions and individuals to use electronic networks available around the clock in the application of the trading operations.
Development: one of the most basic characteristics of the financial markets; they depend on the existence of laws to regulate them, and ensure that all investor information into the investment operations at the appropriate times for them.
The importance of the stock market :
Is the stock market important markets in the economic sector, and outlines its importance according to the following conditions:
Economic indicator: any uses the stock market as an indicator to measure the economic situation of the state, it also helps to reverse all of the changes, and to clarify the stock prices in terms of rise or decline, which refers to the boom or recession in the economic situation.
Put prices of the securities: helping to provide valuable securities that are considered on the basis of the effect of supply and demand, and that in assessing the nature of demand for these securities, which is an important benefit to investors; it will help to know the value of the investment.
Ensure the safety of financial operations: it is important that the application of these markets, relying on the note over the safety of companies and their ability to apply the regulations and rules while dealing with the stock exchange.
Participate in economic growth: supporting the stock markets ability to invest, through the exchange of stock between different companies, leading to the construction of capital and contributing to economic development.
Encouraging savings and investment: by providing offers investment most of the stock, which helps in attracting a lot of individuals towards saving for investment in securities offered by companies, rather than applied to investments in assets that do not bring any financial returns, such as gold.
The objectives of the stock market :
Seek of the stock market to achieve a range of goals including:
Building a secure investment able to achieve a competition that credible.
Develop all the methods and means used in trading; by applying the best and latest ways. Development work in the stock market; through the excellence in services provided to individuals and businesses.
Providing information about trading investors and dealers in the stock market.
To support your awareness in the investment, which includes all individuals in the community; especially those dealing with the stock market.
Development in the financial instruments used by investors in the stock market.
The definition of stocks and bonds
Definition of stock:
Stock (in English: Stock) is a certificate of private shareholders used to document their ownership rights in shareholding companies, and stock as a share of the track to the investor and form part of the capital property. Definitions of other shares are part of the value of the enterprise or company, it is possible to invest and circulation.
Definition of bond :
Bond (in English: Bonds) is the written contract contains an undertaking to pay a sum of money at a certain time, or when you achieve the requirement, and all agreements and contracts loans, bonds, and.
And bonds as money borrowed by governments or enterprises, and undertake to repay with added interest in date is agreed. Definitions of other authorities are the instruments sealed; there are collateral under its pay one individual or government or institution, a specific sum of money.
The characteristics of the stock :
There are several characteristics distinguish the shares from other securities, Here Comes the information about the characteristics of the type of the two main stocks are:
The characteristics of ordinary shares: include the following:
- These constitute equity ownership in the property, and all shares of which the share of one throw is not a percentage; i.e., in the case of released property 1000 shares, bought one of the investors is 100 shares, when he thinks he got 10% of the ownership of the property.
- The right to vote; a franchise is one of the basic features of stocks, depends application. on the role of shareholders in voting to choose the administrative body responsible for the business, it also provides the right for the shareholders in providing their opinions about your pages with the acquisition and merger between companies.
- The value of the stock: the undefined value may rise or less until it reaches zero; which leads to a losing stock value.
- Payment of dividends: one of the important feature of this stock; where companies pay profits to shareholders representing their share of the profits.
The characteristics of the preferred shares, include the following:
- Possesses this kind of stock profit nature are cumulative or non-cumulative, but is characterized mostly that their profits are cumulative; that is, profits that are not paid by the company to shareholders to accumulate, and must be paid before the payment of dividends own equity.
- Does not prevent this type of stock the right to vote, because shareholders receive preferential companies; so don’t allow them to vote only during the occurrence of certain circumstances, such as late distribution of the profits accumulated for a period of two years.
- Possess most of the preferred stock of the par value, usually determined distribution rights by relying on their nominal value.
The characteristics of the bond features of the bond contracts of the properties, and the most important:
- Is an obligation on the issuer to it; so it is believed the owners of the bond creditors for this effort.
- Gets the owner of the bond returns consist of interest rate periodically, whether quarterly or half-yearly or yearly; by relying on the nominal value of the bond, as it is getting a return of capital results from the difference of the phenomenon between acquisition value and sale value in the market.
- The right of the owner of the bond has in all cases without attention to the achievement of the company’s profits or not. Owns each bond the maturity date of the private, must be paid its value by this date.
- Gets the owner of the bond to its full rights upon liquidation of the company prior to the shareholders ‘ equity.
Types of stock and owns all of the stock and bond types, Here Comes information on the types of each:
- Ordinary shares: is the most prevalent among all types of stocks, when talking about the stock is referred to as this kind of, as are the majority of the stock issued by the company of equity, and returns of financial high compared to other types of securities.
Preference shares: are the shares represent a certain portion of the ownership of property, and depend on to provide the amount of the fixed earnings, and this thing of features that distinguish them from ordinary shares.
Form bond group of species, classified according to specific criteria, including:
Bonds according to the type of warranty, and submit to two types: guaranteed bonds: are bonds include assets such as land and real estate, and the liquidation of the company or the non-payment of the obligations of the owners of the bonds and the disposition of such assets; to get their rights. Unsecured bonds: are bonds do not guarantee asset, and guarantee its is the net asset value of the company.
- The bonds in accordance with the possibility of trading them, include the following: bearer bonds; these securities will accept trading a purchase or sale, and the interest due on it offers investor’s bank coupon with the attachment of the bond; and in order to get the value of the interest, these are called bonds name of bond coupon. Bonds registered in the names of investors, and its benefits are paid by cheque in the names of the owners, these provide bond protection to their owners than lost or stolen.
- Bonds according to the value of issued, include three types: bonds that are sold at their nominal value; and where investors believe that the ratio of the coupon to the authorities commensurate with the scale of risks affecting the investment. Bonds sold at a discount that is applicable to the nominal value; and where the ratio of the coupon for less than bonds of a similar level of risk, and asks the opponent to compensate investors for the actual value paid little compared to the nominal. Bonds sold high value compared to its par value; and where the ratio of the coupon for the higher than bonds of a similar level of risk.
- The bonds in accordance with the terms issued, and submit to the following types: bonds issued by enterprises; in order to finance its investments with medium and long term. Bonds issued by the public treasury to governments. Bonds issued by international organizations.