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The Stock Market

Stock marketThe Stock Market is where shares within different public limited companies are traded. The stock market is a vital component of the economy as it provides companies with much needed capital and provides a free and regulated market for the general public to trade in their shares.

Investors will buy shares on the Stock Market with the expectation of an ongoing revenue, through the dividends paid out by companies, along with a capital gain through an increase in value of the company and thus the value of their shareholding. These expectations would normally only materialise if the investor’s company is profitable or through external factors such as being the subject of a takeover bid. Investors can also lose money if share prices drop or the company itself goes into financial decline.

The biggest Stock Exchanges around are the New York Stock Exchange and the Nasdaq (both USA) and the Tokyo Stock Exchange in Japan.

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