2007-02-02 02:20:40 · 9 answers · asked by suresh k 1 in Social Science ➔ Economics
Through share markets you invest in the companies. The companies use the money to grow. When the companies grow, so does the economy. This money comes back to you in the form of returns. Then again you invest...And the cycle goes on...Share market helps your growth as well as the economys...
2007-02-02 02:34:45 · answer #1 · answered by Kavs 1 · 0⤊ 0⤋
Share markets perform the following vital functions:
1. they provide a forum for buying and selling shares under a regulatory framework and with rules and regulations governing all the trading activities.
2. They provide a continuous market for buying and selling. One can always find a buyer for the shares he/she wants to sell and can always find a seller for the shares he/she wants to buy. In the absence of share markets, one need to search out an intending buyer/seller. Not only is this process tedious and difficult but also involves high costs.
3. They furnish a price forming mechanism. After all, why is a Rs 10 share selling for, say, Rs 280/- or so? Market participants who are many and are highly resourceful assess the several factors and variables and determine prices which continuously change in response to changes in these variables/forces.
4. They offer liquidity in the sense that one can buy or sell any quantity of shares at the then prevailing price without affecting the prices owing to these transactions.
5. They operate with a safety valve always blinking and this is made possible through the settlement systems whch operate subject to rigorous rules and regulations and with the prime objective of a zero default situation.
Now, these functions are very vital and in their absence nobody would ever buy the shares of a company. When a company issues share capital, investors subscribe to it in the expectation of selling the shares allotted to them at a higher price in the market and make profits.
This, by itself, is innocuous and seemingly harmless. But, much of this would not happen if there are no volumes and there is no continuous trading activity. While these features are vital, they have the potential of misuse. Trading degenerates into speculation and speculation into gambling. It is this which leads to several fraudulent practices and tarnishes the functional roles of share markets. Scandals and scams are always perpetrated when a few resourceful participants corner shares and do rigging and circular trading and resort to several other unlawful practices tomanipulate and maximize their personal gains. In the process, the ordinary investor is totally neglected and the regulatory bodies enter the scene to punish and prohibit. These unsavory aspects tend to taint the markets and fuel the negativitiy of the common man toward these forums.
2007-02-02 03:11:16 · answer #2 · answered by braj k 3 · 0⤊ 0⤋
whoa-heavy question-long answer or short answer
short answer
share markets offer a way toinvest your money in a company in exhange for a share of the ownership-sort of-. if the share value rises you amke money and the opposite is true also.
Secondly companies raise money for various endeavors by selling the shares.
thirdly as a part of an overall investment portfolio they dilute your risk by buying shares in several firms with goal of acieving an overall rise in portfolio value one stock can fall but others may rise and more than offset the loss-or you could choose poorly and lose a lot. mutual funds, preselected stock groupings care offered by many investment firms.
Companies raise capital by selling shares
You gamble that the trading of shares yield an increase in their value and hence your assessts or you could loss you "***"-ettts if you do not know what you are doing or an unexpected event occurs-e.g. Enron scandal
2007-02-02 02:41:14 · answer #3 · answered by dugal45 3 · 0⤊ 0⤋
They provide liquidity to the investors who invested in the equity of the companies - This is the primary function of the share markets. Incidentally they do also perform so many other functions.
2007-02-04 04:39:21 · answer #4 · answered by Alrahcam 4 · 0⤊ 0⤋
primarily, the share market is meant for companies to finance their operations through money taken from the public
when an investor invests in a company, his/her primary aim is TO MAKE CASH
2007-02-02 20:06:40 · answer #5 · answered by sushobhan 6 · 0⤊ 0⤋
share markets help the people to try their luck......that is to invest in companies((by having their shares) and help them , at the same time making good profits for themselves........
indians are recently stepped into this market...and having huge profits....but we need have minimum knowledge of the company before you by share....
2007-02-03 16:25:00 · answer #6 · answered by indian_kru 1 · 0⤊ 0⤋
share markets play the role of supporting pillars
for the infrastructure of economy of any country
2007-02-02 02:31:35 · answer #7 · answered by meena_net_009 1 · 0⤊ 1⤋
more risk, higher returns
2007-02-04 02:34:45 · answer #8 · answered by divya chandran 1 · 0⤊ 0⤋
THAT TELLS U WHERE YOUR COUNTRY STANDS AND
IN WHICH DIRECTION IT IS GOING.........
2007-02-02 02:25:00 · answer #9 · answered by sunny 2 · 0⤊ 0⤋