Functions of Secondary Market:
The secondary market provides an organized place and the mechanism for trading in securities. They also ensure that the deals struck in the stock are fair and within the framework of law. The efficient functioning of the stock exchange creates a conductive climate for an active and growing primary market for new issues.
An active and healthy secondary market in existing securities leads to better psychology of expectations; considerable broadening of investment enquiries renders the task of raising resources by entrepreneurs easier.
Good performance and outlook for equities in the stock exchanges imparts buoyancy to the new issue market.
The good stock exchange facilities the following important
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As seen earlier active, bidding and two-way auction trading takes place in the stock exchange. The result is as near a market for free trading and free competition, as can be found anywhere. The bargains that are struck are at the fairest price, determined by the basic laws of supply and demand. At time large scale speculator activities raise the price of the share. But such activities are ephemeral in nature.
There is no fundamental relationship between book value, par value and market value of share, because the share price may experience a boom if there is large scale investment from an individual or mutual fund company and also during such period too much money chases a few shares.
The performance of the stock exchange is also subject to speculation, which at times, drives up the prices above the investment worth and at others, below it.
Under the normal circumstances, one would leave the situation to the forces of the market- what the buyers and sellers willing to bid and to offer. But in India, conscious policy is adopted to make shares attractive to the foreign institutional investors who evaluates our market, in relation to the other emerging markets.
The stabilization of the stock market prices around a reasonable level would be desirable.
5. Aid to Financing Activities:
Listed company finds it helpful to sell further issues of
Investing money is a major means of generating extra cash that people often participate in. A stock market is a place where investors trade certificates of partial ownership in businesses for a set price. “Through these transactions, companies can raise the initial capital necessary for various aspects of operation, and those who buy the certificates become entitled to a portion of the business' assets and earnings (Kelsey).”
In order to succeed in any business, it is extremely important to understand the stock market. In this assignment we were asked to follow the stock market continuously for four months and understand the market. The stock market is a global marketplace, where goods and services are traded in the form of equities.
A secondary market is a financial market in which securities that have been previously issued can be resold. An investment bank assists in the initial sale of securities in the primary market by underwriting the securities: it guarantees a price for a corporation’s securities and then sells them to the public. A corporation acquires new funds only when its securities are first sold in the primary market.
Once the final pricing and allocation decisions have been made, trading in the shares usually commences within a few days. In some countries it is typical for the investment bank to be involved in a price stabilisation process where the principal purpose is to protect the downward price pressure once trading begins. This process of price stabilisation is usually linked with the granting of an over-allotment option (typically 15% of the total number of shares issued) which have usually been sold during the marketing process (Geddes, 2003).
This accessibility of information and deregulation has encouraged foreign investments, and we can see the surge of new financial products and an increase in financial innovation in the markets today. Stocks can now be dual-listed, traded across markets in two different countries. For example, many large Canadian companies are listed both on the New York Stock Exchange as well as the Toronto Stock Exchange. There are also Brazilian-based companies listed on both the Brazilian and US stock markets. This adds greater liquidity to the companies’ shares traded, and also gives investors more options as to where they can trade.
The stock exchange is a place where individuals or investors can buy and sell shares of stock in any company on the list of exchange. Most people in the United States talk of stock exchange, referring to the New York Stock Exchange (NYSE). NYSE is the largest in the world with increasing importance of Internet trading, moving more and more from a physical trading floor to a global network of exchanges linked electronically from cyber space (Jill, 2006).
Investors in the secondary market often purchase mortgage securities after they are issued. Large institutions make investments in mortgage securities when they are issues. Other dealers in a secondary market sometimes redistribute securities.
Allocating the ownership of economy’s stock capital is the primary role of capital market. In an ideal market the price would provide accurate signals for allocation of resources. Ideal market is one in which firm’s production-investment decisions and investor’s decision regarding securities will depend on the assumption that the security prices fully reflect available information at any point in time. A market in which prices always “fully reflect” available information is called efficient.1
Currently there are over one hundred unique stock exchanges throughout the world. A Stock exchange provides a means for companies to raise capital through issuing stock. This process begins when a private company files to issue
The National Association of Securities Dealers Automated Quotations (NASDAQ) and the New York Stock Exchange (NYSE) are two of the largest and most known stock exchanges across the globe. Both of these stock exchanges handles and mediates the trade, sale, and purchasing of different stocks, bonds, and securities. While both of these stock exchanges have their own unique methods and forms of purchasing and selling stocks, they both serve the same purpose and function, which is a marketplace for the sales of stocks.
The stock market is like a playground for business. Business’s either collapse or succeed when stock prices go up or down depending on the market at the time; it’s like gambling. The stock market is a medium for business’s and investors who want to be part
The Stock Market is an organized market for the trading of stocks and bonds. In Europe a stock exchange is often called a bourse. Stock exchanges exist in all-important financial centers of the world. Members of an exchange buy and sell for themselves or for others, charging commissions. A stock may be traded only if it is listed on an exchange after having met certain requirements. The New York Stock Exchange (founded 1790) is the largest in the U.S., handling more than 70% (in market value) of all transactions. The American Stock Exchange (Amex), also in New York City, and regional exchanges account for the remainder. Unlisted shares, often of smaller companies, are traded in the growing over-the-counter
Some studies do examine the portfolio management along with the market volatility, impact however; the scope is often limited to a Bangalore. This study takes a look at the awareness of Mutual fund industries its growth in India. If one considers the transactions by domestic mutual funds (MFs) in the equity market an indicator of domestic investor participation in the stock market, domestic investors have been active participants in recent times. But the common perception that domestic investors lack market-moving influence is not entirely based on fact.
This chapter will address theories relevant to the behavior of financial markets and specifically stock prices movement on release of new information into the market, followed by the determinants of stock price, international and local empirical evidence and finally a summary of the chapter.
The London Stock Exchange lists the FTSE 100 which is a share index of stocks of 100 companies showing the highest market capitalisation. This will be completed by discussing the movement of the company’s share during the time period. The companies will also be compared to the movement of the shares against each other, against FTSE 100 and against its industry sector. The records and comparisons will be all in context of Stock Market Efficiency. Stock Market allows a company to be aware of the trade with shares and finance which is at an agreeable price. Two of the companies chosen to