A stock, also known as an equity, is a share of a corporation that signifies partial ownership. There are several types of stocks however, the two main forms of stocks are common and preferred. Typically, common stocks provide voting rights and dividends and/or capital appreciation. Preferred stocks generally do not entitle investors with voting rights but grants them with more claim on the company’s assets. Also, preferred stockholders receive dividends before common stockholders and have priority should the company go bankrupt.
An exchange is a marketplace in which stocks, options and futures, bonds, and commodities are traded. The function of an exchange is to give buyers and sellers a platform to trade fairly. An exchange may be in the form of a physical location or an electronic platform. Exchanges are located throughout the world, some of which
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Each Index has its own measure of computation. Stock Market Indexes are affected by a number of factors which can be company-specific, economic, political, and international. Stock Prices help predict the performance of the market. If the price of a stock is increasing then it has perceived positive trends. However, if it decreases then it is perceived as negatively affecting the market. One of the most well-known Indexes is The Dow Jones Industrial Average, which includes the stocks of 30 of the largest companies in the United States and represents about a quarter of the value of the U.S. stock market. Nevertheless, the Dow Jones has been described as faulty due to its lack of diversity. The Standard & Poor's 500 Stock Index is much larger and diverse than the Dow Jones. It is made up of 500 stocks and represents approximately 70% of the total value of U.S. stock markets. Overall, Stock Market Indices do not provide investors with predictions, however, they can signal changes within the market and thus, the