A stock exchange is a place or organization by which traders or companies can trade stocks. One may want to get their stock listed on a stock exchange while other stocks may be traded over the counter (OTC) or through a dealer.
A stock exchange plays vital roles especially the global economy as outlined below:
- Raising capital for businesses- It provides companies with the facility to raise capital for expansion through selling of shares to the public .This can be through going to public and listing your company in major stock exchanges to enable raise high volume of capital unless your company generates good sales and earnings or has positive outcomes.
- Mobilizing savings for investments whereby people withdraw their saving and invest in shares and the company can allocate the resources to manage their business.
- Also stock exchange facilitates company growth through expansion of product lines, channels, market shares.
- Barometer of the economy- Stock exchange is the barometer of the economy as prices may rise or fall depending on economic forces.
- Creating opportunities for small businesses that is making traders buys shares one can afford.