What is the Stock Market?
There are actually multiple different stock exchanges that make up what people refer to in general as the “stock market”. The New York Stock Exchange (NYSE) and the Nasdaq are the two largest exchanges in the United States, a stock exchange is a place where investors come together to buy and sell, or exchange, shares of a company.
Which Stocks are for Sale?
The goal of an exchange like the NYSE is to make it as efficient and cost-effective as possible for investors to buy and sell stocks. The NYSE is a publicly traded company so the value of it’s own stock depends on how well it runs the exchange. To insure that only legitimate companies are bought and sold on the exchange the NYSE has requirements that all companies must meet before their stock can be traded on the exchange. One of the main requirements is that companies comply with the rules established by the Securities & Exchange Commission (SEC), the portion of the US government that monitors and regulates the securities industry.
The listing rules are designed to protect investors. The goal is to insure that companies who are offering shares of stock for sale are relatively stable and profitable and that they provide investors adequate financial information about the company.
Buying & Selling Stock
One of the other rules of stock exchanges is that you need a license to be able to buy and sell shares of companies listed on the exchange.
Thanks to market makers, individual investors can trade in and out of the stock market without worrying about finding an individual buyer or seller for shares of stock.
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