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FAQ
What is a Stock?
What is Stock exchange?
What is meant by the Secondary Market?
What is an IPO?
What is the difference between the primary market and the secondary market?
Sometimes the best way to learn about stock market investing is to ask questions. Here are some frequently asked questions that may help:
Q: What is a Stock?
A:
A stock represents a unit of ownership in a company. Most of the stock bought on the open market is "common" stock and carries the right to vote on important matters of the corporation including who serves on the board of directors.
Q: What is Stock exchange?
A:
A stock exchange is an entity which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds.
Q: What is meant by the Secondary Market?
A:
Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. The secondary market provides an efficient platform for trading of these securities. For the management of the company, Secondary equity markets serve as a monitoring and control conduit—by facilitating value-enhancing control activities, enabling implementation of incentive-based management contracts, and aggregating information (via price discovery) that guides management decisions.
Q: What is an IPO?
A:
An Initial Public Offering, or IPO, is the first sale of stock by a company to the public.
Q: What is the difference between the primary market and the secondary market?
A:
In the primary market, securities are offered to public for subscription for the purpose of raising capital or fund. Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market.
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