Other than supermarket, there is another market that many people visit every day. It is the stock market. To a certain extent, both supermarket and stock market are places for buying and selling or for transactions. But, stock market is of course much more complicated than a supermarket. Without an understanding of the stock market, you are going to put your assets in dangers.
With reference to the financial market study, stock market is composed of two sub-markets namely primary and secondary market. Primary market refers to the market for the stocks that are newly issued. In other words, it is the market for the initial public offering. The secondary market on the other hand is for the listed stock. The buy and sell of the existing listed stock.
Dealers and brokers are two terms that are highly related to stock market. You can regard both dealers and brokers as agents. Dealers are agents who maintain their own stock inventories. Therefore, they are able to buy and sell stocks at any time. Unlike dealers, brokers maintain no stock inventories. They work on an arrangement to bring buyers and sellers together.
NYSE is also known as the Big Board. There are people named member of the NYSE. These members are seat owners. They pay a great price (can be over $2 million) to gain seats on the NYSE, which allow them to buy and sell securities on the exchange floor without paying commission. Other than this type of member, there are several other types. They include commission brokers, specialist, floor brokers and floor traders. Each of such members has different authorities and responsibilities.
Commission brokers are NYSE members who execute the orders from customer for buying and selling of stock. They are responsible to get the best price for their customers. Specialists are also called market makers. They are dealers for a small number of securities on the floor. They post and ask prices for their assigned securities. Floor brokers execute orders from commission brokers. They receive a standard fee from the commission brokers in return. Finally, floor traders are independent traders that work on their own accounts. They buy and sell securities according to their own anticipation of securities price fluctuations.
NYSE is operated with the members buy and sell stocks according to the order flow from customers. For example, you can find the commission brokers walk and return from the specialists’ posts to execute and confirm the orders. As Nasdaq is even larger than NYSE, its operation differ from NYSE. Nasdaq is a computer network without physical trading location. All the trading is done through dealers.
When you look through the pages of financial newspaper, you will find the financial information for several different markets. Basic information including the price, dividend and yield is reported on such financial pages. For example, you can find the last 52 weeks’ high and low price, the day’s high, low and closing price, the annual dividend and the dividend yield.
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