Stock Market
The term "stock market" refers to a large number of markets worldwide in which shares of stock are bought and sold. In 1999 there were 142 such markets in major cities around the world, where hundreds of millions of shares of stock changed hands daily.
Some stock trading takes place in traditional markets, where representatives of buyers and sellers meet on a trading floor to bid on and sell stocks. The stocks traded in these markets are sold to the highest bidder by auction. Increasingly, however, stocks are traded in markets that have no physical trading floor, but are bought or sold electronically.
Electronic stock trading involves networks of computers and/or telephones used to link brokers. Stock price is determined by negotiation between representatives of buyers and sellers, rather than by auction. Hence, these markets are called "negotiated markets." All the stock exchanges around the world, including auction markets at centralized locations and electronic negotiated markets, are collectively called the stock market.
Shares of stock are the basic elements bought and sold in the stock market. In order to raise working capital, a company may offer for sale to the public "shares" or "portions of ownership" in the company.
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