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SS3: COMMERCE - 2ND TERM

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Definition of Stock Exchange

The stock exchange market is a specialized market for the buying and selling of securities. The securities are stocks and shares which represent ownership interests in businesses, debentures, and government bonds.

There are two main factors that brought about the stock Exchange. These factors are;

i. People who have extra funds left after meeting their needs may decide to invest the money in company shares or governments where it will yield extra income for them.

ii. Some companies especially public limited liability companies and government alike may desire to raise money for business expansion and development projects through public and individual investors. 

The government also issue bonds to members of the public for fiscal measure or development purposes. The owners or shareholders o f stock exchange are financial firms and institutions. 

Some wealthy individuals with experience and integrity in finance and business may also be accepted as shareholders. 

The management of the stock exchange is carried out by a team of elected shareholders during an annual general meeting. 

These elected members constitute the council or board of stock exchange and it is headed by a president while a Director-General is the head of administration. 

The council makes the policies that guide the operation of the stock exchange. It draws rules and regulations for stockbrokers and enforces discipline among the members. It grants quotations to companies in a listing of securities. It protects the interests of the investing public and considers complaints of members.

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