Economics
Equity Market
The equity market, also known as the stock market, is a platform where shares of publicly traded companies are bought and sold. It provides a means for companies to raise capital by selling ownership stakes to investors, and for investors to potentially earn returns through capital appreciation and dividends. The equity market plays a crucial role in the economy by facilitating investment and capital allocation.
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6 Key excerpts on "Equity Market"
eBook - PDF- David Loader(Author)
- 2002(Publication Date)
- Butterworth-Heinemann(Publisher)
Chapter 3 Equity Markets E quity markets are diverse. There are the exchanges which deal with listed shares of the largest companies in the world and exchanges, sometimes the same ones, dealing with fledgling com-panies. There are also unlisted securities. Equity Markets are high profile. The news bulletins on television and radio often refer to the rise or fall of the local index on the stock market. Many private investors start their portfolios with equity shares, sometimes from incentive schemes operated by their employ-ers or as a result of a government privatizing a hitherto-nationalized industry. The policy of the Conservative government in the UK, under Margaret Thatcher, created thousands of new investors with the selling off of companies and utilities like British Telecom and British Gas. Share options are a popular way to reward and ‘lock-in’ employees, as this option gives them the opportunity to convert to shares and have a stake in the company and thus its success. Equity Markets therefore act as another kind of barometer of the wellbeing of a country, reflecting the prospects of manufacturing, services, utilities, etc. They also offer good value to the investor as both a profit, as a result of an increase in share price, and a return, in the form of dividends, is possible. Possible is the key word here. Unlike most debt, which will result in the par value being redeemed and some debt where the return in the form of interest is fixed, equity is totally different. An investor might buy shares and never receive a dividend and see the company go into liquidation, making the shares worthless. To raise capital companies can, as an alternative to issuing debt, issue equity in the form of ordinary shares in the UK, common stock in the USA and similar titles in other countries. Unlike debt and money-market instruments, however, the issuing of shares will, in most cases, give away part-ownership of the business.
eBook - ePubMoney and Banking
An International Text
- Robert Eyler(Author)
- 2009(Publication Date)
- Routledge(Publisher)
4 Equity Markets, stock markets and real estateIntroduction
The stock market, where ownership in companies is bought and sold, is a market where you must have a license or pay someone with a license to buy and sell assets for you. Securities brokers are such people, and are paid a commission for their services. There are three general ways firms can set up their ownership: sole proprietorships, partnerships or corporations. Corporations are companies that issue certificates of ownership, known as shares, and use Equity Markets to finance real asset purchases initially. Suppose you were a partner in a computer software company. You and your partner decide you need more office space for your employees. Your firm has three ways it can finance this expansion. The firm can use its retained earnings, or the accumulated profits the company has hopefully made and accrued over time. Second, your firm can also take a loan from a bank or find some debt instrument to gain access to cash and pay interest and principal over time. Finally, your firm can expand equity and find new partners who will help finance the expansion as trade for partnership, or go public and expand ownership through the Equity Market.This initial choice to go public is where the primary market comes into play. You announce to the world that you are entertaining bids from brokerage houses for your IPO, and the wheel begins to roll. Decisions you need to make if you decide to go public include the amount of common stock you will offer and whether you will offer preferred stock. Common stock is the classic type of stock market asset; it is traded with a value changing every day on the secondary market. It is considered common because each stock has ownership and voting rights, but only has the privilege of receiving dividends if paid; dividends are a disbursement of retained earnings by a firm. A firm is not obliged to pay common stockholders any dividends at all.
eBook - PDFMoney, Markets, and Democracy
Politically Skewed Financial Markets and How to Fix Them
- George Bragues(Author)
- 2016(Publication Date)
- Palgrave Macmillan(Publisher)
119 © The Author(s) 2017 G. Bragues, Money, Markets, and Democracy, DOI 10.1057/978-1-137-56940-0_5 CHAPTER 5 When most people think of “the markets”, what immediately comes to mind is the trading of stocks. Indeed, nothing in the universe of invest- ment finance has a greater hold on the popular mind than the stock market. When local news reports cover business, it is always, if not solely, equities that they refer to in alerting us to the latest numbers on the Dow Jones and the Nasdaq (National Association of Securities Dealers Automated Quotation). The major US television networks specializing in business news—CNBC and Fox Business in particular—have their screens flowing with stock quotes. Even though newspapers no longer publish full tables of share prices, this data continues to feature prominently in business sec- tions. Newspapers continue to feature a list of the most actively traded stocks, a rundown of the biggest gainers and losers, as well as a sum- mary of the high, low, and closing levels of local company shares. On the Internet, where most people now go to look up quotes, this price action, along with the related stories, definitely stands out. To see this, one need only consult the home pages of popular financial sites like Google Finance, CNN Money, Yahoo Finance, TheStreet.Com, and MarketWatch. Other than perhaps real estate, stocks are the most discussed asset class at dinner parties and in everyday conversations. It is not hard to figure out why this is the case. Equity price movements stir two of the mightier passions of the human soul: hope and the love of gain. The stock market offers investors the chance of putting a relatively small amount of money into a company’s shares at the early stages of its The Stock Market growth trajectory and then watching that stake multiply into a huge for- tune as the firm’s profits leap exponentially. Take an investor who invested $10,000 in shares of Apple Inc.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- Orange Apple(Publisher)
____________________ WORLD TECHNOLOGIES ____________________ Chapter- 11 Financial Market In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one place, thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate: • The raising of capital (in the capital markets) • The transfer of risk (in the derivatives markets) • International trade (in the currency markets) – and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. In mathematical finance, the concept of a financial market is defined in terms of a continuous-time Brownian motion stochastic process. Definition In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them. ____________________ WORLD TECHNOLOGIES ____________________ The term market is sometimes used for what are more strictly exchanges , organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange.
No longer available |Learn more- (Author)
- 2014(Publication Date)
- Orange Apple(Publisher)
____________________ WORLD TECHNOLOGIES ____________________ Chapter- 7 Financial Market In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one place, thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate: • The raising of capital (in the capital markets) • The transfer of risk (in the derivatives markets) • International trade (in the currency markets) – and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. In mathematical finance, the concept of a financial market is defined in terms of a continuous-time Brownian motion stochastic process. Definition In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them. ____________________ WORLD TECHNOLOGIES ____________________ The term market is sometimes used for what are more strictly exchanges , organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange.
- G. Mavrotas(Author)
- 2008(Publication Date)
- Palgrave Macmillan(Publisher)
In fact, by their nature, Equity Markets make it possible to transfer the ownership of investment projects that have not yet ended without disrupting physical production. This feature of stock markets has two effects: (i) it attracts more resources into long- term investments from investors who would not have committed their finances for long periods of time; and (ii) it reduces the loss of resources that would have occurred with the disruption of physical production. Both of these effects will spur growth. The first does this by increasing the saving rate; and the second by reducing actual resources lost by the premature liquidation of investments. Following Levine, Bencivenga et al. (1996) maintain that Equity Markets can increase the average productivity of capital and, in turn, affect growth positively by decreasing liquidity costs. The idea is that projects that require longer periods of time to complete are usually also investments with a higher expected return. These projects, however, will not be adopted by investors who do not want to tie up their financial resources for a long time. Therefore, assets with long maturities will never be in demand, unless these can be liquidated easily and at low cost. Again, Equity Markets make these projects attractive to investors by allowing the trading of all or part of a project’s ownership at any time. The channels of interaction between stock markets and capital accumulation and growth are quite clear. As Equity Markets develop, longer-maturity projects with higher rates of return become more attractive, the average productivity of capital increases, and so does the rate of growth. In a framework where agents face liquidity and productivity shocks, financial markets can help to reallocate resources towards the most productive investments by reducing idiosyncratic risks. Indeed, by Salvatore Capasso 25
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