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Stock Market Importance

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A stock market is a place where stocks and bonds are regularly traded. The stock market plays an important role in the economy where the prices of the stock reflect upon the growth of the country’s economy. Companies who choose to list themselves in the stock market are known as public listed companies where their company assets are open for investment to the public. The stock market connects the buyer and seller where companies are in need of funds and investors are looking for a place to invest their money in. Investors who have invested money into the stocks of the public listed company are now shareholders of that company, where investors now own a part of the company. The purpose of investors investing their money into the stock market is for the financial return, also known as profits. If the company or firm makes a profit, shareholders will be rewarded with dividends however, if the company is making losses, shareholders will also be making a loss in their investment. The stock market prices are volatile where prices rise and fall on a daily basis therefore, investors who invests in the stock market should be aware of the risks involved. The importance of stock market The primary importance of the stock market is to increase the country’s economy as well as the global economy. When investors invest their money in stocks, they are contributing to the growth and development of the economy. Most companies choose to get listed in order to be able to issue shares to the public to generate funds for their growth and expansion. Besides that, issuing shares to the public is less risky compared to taking loans from financial institutions where there are higher charges for interest. If the company is developing well with these inv... ... middle of paper ... ... earn their profit. Therefore, if a company is not performing up to the investors’ expectations, it can put a lot of pressure on them. Conclusion In conclusion, the stock market is a conservative approach for companies to seek funds for further expansion and development. The stock market plays an important role in developing the economy as it helps the economy to develop and grow when investors invest their money in to the stock. With investments pouring into the economy, companies are able to make bigger profits to reward their shareholders with dividends. Although there are disadvantages of a public listed company, the advantages outweigh the disadvantages where companies are able to seek for additional funds for future expansion and growth. A public listed company also has a better reputation and credibility where it is able to contribute to the global economy.
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