What is a stock market & how does it work?

The stock market is a group of stock exchanges where shares of public companies are bought and sold. The stock market provides liquidity and price transparency to investors. The Securities and Exchange Commission regulates the US stock market.

How are stocks classified?

While stocks can be classified in several ways, two of the most common are by market capitalization and by sector. Market cap refers to the total market value of a company's outstanding shares and is calculated by multiplying these shares by the current market price of one share.

What is a stock market trader?

Traders in the stock market buy or sell shares on one or more of the stock exchanges that are part of the overall stock market. The leading U.S. stock exchanges include the New York Stock Exchange (NYSE) and the Nasdaq . Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.

Why are stock markets a component of a free-market economy?

Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations. Stock markets are components of a free-market economy because they enable democratized access to investor trading and exchange of capital. Stock markets create efficient price discovery and efficient dealing.