Page 179 - Initial Public Offering - An Introduction to IPO on Wall Street

12. Stock Markets
The stock market provides greater opportunities for growth than many other options for
savings and investment, but it also poses several challenges that can reduce returns. In the
stock market, taxation, trading fees, and volatile stock rates are just a few of the risks that can
lead to losses.

Here, we will discuss the basics of a stock market, the principles for investing in the stock
market, and the different types of the stock market where buying and selling of stock
happens.

12.1 Understanding the Stock Market
The stock market refers to the set of exchanges and markets where the acquisition, sale, and
issuance of shares of publicly traded companies take place regularly. These financial
operations are carried out through structured institutionalized exchanges or over-the-counter
(OTC) markets operating under a specified set of rules.

In a country or area, there may be several stock trading venues that allow transactions in
stocks and other types of securities. Although the stock market and stock exchange are used
interchangeably, the latter word is usually a variant of the former.

If one states that they trade in the stock market, it implies that on one or more of the stock
exchange(s) that are part of the larger stock market, they purchase and sell shares/equities.

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