The stock market is the place where the stocks are traded. The stock market is a secondary market where stocks, already issued, are traded. The stock market can be either an organised and regulated financial market ((Official) Exchange trading) or not (OTC (Over-the-Counter) trading).
Some examples of exchanges are the New York Stock Exchange, the Borsa Valori SpA, the London Stock Exchange-LSE, while the biggest OTC market is the NASDAQ (National Association of Securities Dealers Automated Quotation), which is certainly the most liquid market for volume traded in the world. It was set up by the National Association of Securities Dealers (NASD) as an OTC market in which trading was completely electronic. Stocks issued by listed companies are traded on these OTC markets, where different modalities and regulations apply. These markets are different from one another owing to the different regulations that apply to them, which consequently leads to a different liquidity in the market itself.
The stock market is physically located in the Official Exchange. The stock market is one of the most important components of the more complex system called the financial market. The stock market can be summarised through its stock index, which is the statistical indicator used for measuring and reporting changes in the market value of a group of stocks/shares.
Graph. Stock market trend through the representative stock index.
From the graph, it is possible to see that the stock market is fully represented by the stock index. Via the index, it is possible to immediately understand whether the market has had a positive/negative daily return.
Becchetti, L., Ciciretti, R., Trenta, U., 2007, Modelli di Asset Pricing I: Titoli Azionari, in Il Sistema Finanziario Internazionale, Michele Bagella, a cura di, Giappichelli, Torino
Editor: Rocco CICIRETTI
© 2009 ASSONEBB