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What is Stock Market?

A stock market is a platform to buy and sell stocks. The stock quotes are decided by demand and supply. Stocks are distinct from the property and the assets of a business which may fluctuate in quantity and value.

Stock markets used to be market place where a group of buyers and sellers used to gather together and express the willingness to buy/sell a stock at a willing price. Whenever the two match a deal took place.

Wow

With the advent of IT, now the stock markets have become almost paperless. Now you open a trading account with a broker, transfer the requisite amount and you can start trading in stocks from home.

What is Stock?

The stock of a business is divided into shares, the total of which must be stated at the time of business formation. Given the total amount of money invested into the business, a share has a certain declared face value, commonly known as the par value of a share. The par value is the de minimis (minimum) amount of money that a business may issue and sell shares for in many jurisdictions and it is the value represented as capital in the accounting of the business. In other jurisdictions, however, shares may not have an associated par value at all. Such stock is often called non-par stock. Shares represent a fraction of ownership in a business. A business may declare different types (classes) of shares, each having distinctive ownership rules, privileges, or share values.

Imagine a business is set up with initial investment of say 10 billion. The promoter, the person who starts this venture has say 40 billion and needs another 60 billion. So he may opt for getting this amount from public in a country.

So he will get the government permission for the same explaining the authorities the need.

These investors along with the promoter is called share holders, which directly mean that they are pro data share holders in the new company and they will be eligible for the profit share or any other benefit that the company may get in future.

Note that, this also means that they will be eligible for the losses too. But, one point to note is that the loss will be only up to the level of their investment. That means a person will not be asked again to give money to fill up the losses.

This 100 billion is split into X stocks of face value y , where x X y = 100 billions.

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