If it were not for laws and regulations, then trading stocks would be just like the Wild West. But thanks to laws and organizations that oversee the investing world, you can have a little peace of mind when you decide to start buying stocks. You will start your journey at a stock exchange, which is a term that many people have heard, but so very few actually know what it means.
What is a Stock Exchange?
A stock exchange is a marketplace where licensed stock traders meet to buy and sell stocks, bonds, commodities, and anything else that is offered on the exchange. Each exchange has its own set of rules and all exchanges follow state and federal trading laws. According to About.com, stocks that are officially traded on an exchange are considered to be listed stocks.
Benefits of an Exchange
As an economic tool, a stock exchange has several benefits that help to maintain and even grow an economy. According to Quora.com, the two more prominent features of an exchange are risk dissemination and valuation. An exchange allows the risk of owning stocks to be spread around to thousands of buyers to help reduce significant risk to one group or individual. A stock market's activity can also be valuated to be used as a significant economic indicator.
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