Finance

The US Stock Market and the New York Stock Exchange

Stocks are a form of part-ownership of a business evidenced by a stock certificate. Shares are originally sold whenever a company needs money for business development or expansion. While a small business may not need shareholders from outside the owners family, an expansion strategic decision may require that he sells shares to the public. This is done through an initial public offering. The buyers and owners of shares of stock can subsequently sell their shares in the stock exchange where the stock is normally traded. While stocks may be kept as investment, often it does not imply participation in the running of the business for one can sell his shares at any time when it has appreciated in value to earn a profit or when he needs cash.The stock exchange is the place where individuals trade stocks. In the United States the three most important places where to trade stocks are the New York Stock Excange, the American Stock Excange and the Nasdaq. One can buy or sell stocks in these exchanges through stock brokers or indirectly through mutual fund companies or company dividend reinvestment plans.Wall Street is a term one often hears to refer to a marketplace for stocks. Physically it is street, an address in New York city, but as a market it is where merchants, agents and customers of finance meet to buy and sell stocks or bonds (Little and Rhodes, 1991). Thus it is composed of all the the individual marketplaces and the total community of interests that maintains them and is regulated closely by the Securities and Exchange Commission (ibid). The name Wall Street comprises the two major exchanges and the regional stock exchanges, but it may also include the nationwide network of brokers/dealers known as the over-the-counter (OTC) market, the brokerage firms and their employees, and all investors, whether individual or institutional. Wall Street can also be divided into two major functions: the provision of a primary market and secondary market.

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