• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

The Stock market and modern economy

Extracts from this document...

Introduction

Stock market It is very interesting when we look at stock market and modern economy, and how they operate despite a changing environment. To my understanding, stock and stock exchange is the very key and visible part of our modern economy or so called capitalist system. To trace and take a close look at the issue help substantially in understanding terms such as "production", "profitability", "price", "dividend", as well as "trade or exchange of shares on stock market". One: Initiation or evolution of stock market Well, we all know that stock market or stock exchange is a place where people trade shares of those listed companies. Initiation of stock exchange can be traced back a century ago, along with the rapid development of capital expansion and market economy. Assets of companies with limited liabilities are usually divided into a certain number of "shares". People who do not engaged in daily management of companies may also "own" a portion or part of a company in the form of holding its shares or stocks. ...read more.

Middle

Lessons from stock exchanges in less developed nations are considerably noticeable. Policies adopted by those authorities are either over regulated that market is much constraint in development or "policy dominated", or big players may manipulate market prices when regulations are less effective. 2. Share issuance. As a company with limited liability, is it possible to issue shares and raise funds? Well, theoretically it is possible, yet depending on different prerequisites. General speaking, the following criteria must be met by potential issuers: a. Be profitable for the last 3 consecutive years; b. Profit margin must be over certain percentage; c. Committed to industries that is not against public interests or should be encouraged by government; d. Economic scale of the company should be over certain benchmark; e. Well established and structured; f. The overall capacity of stock exchange; g. Queuing up for a proper timing and approval. h. Other criteria considered necessary by authorities. Why do they post all these conditions for potential issuers? The answer is simple: to protect the interests of investors and a healthy or steady performance of economy. ...read more.

Conclusion

It has many things to do with economic policies, business cycles, speculating psychology, economic development trend, purchasing power, supply and demand, and many others. That's why economists build up so many mathematic models, in trying to understand and summarizing the behavior of stock markets. Yet few of them have proved to be successful. Helpless people have to acknowledge the fact that stock market is, after all, irrational. Three: The world's most important stock exchanges The world's most important stock exchange include London, New York, Tokyo, Frankfurt, Hong Kong and Singapore. Capitalization in these markets occupies a dominant portion of global business turnover. There is no exception that world most famous corporations are listed on above said markets. Thousands of billions of dollars are traded each day through highly advanced and sophisticated telecommunication systems. A cough by these markets would result in serious flu in world's economy. Legendary stories are told that millions of people are getting a big fortune by speculating stock prices, while other numerous people are getting bankrupted. It is a two sided sword that must be carefully watched, but we can't imagine a world without stock markets. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Chinese economy sets for soft landing in 2005.

    In May, the consumer price index grew 4.4 per cent on the mainland, the fastest in seven years, as prices for grain and fuel surged. GDP growth would slow to 7-8 per cent next year and a hard landing would mean it would be only in the 2-3 per cent range, Byrne said.

  2. Bellway Plc is a holding company with subsidiaries; its main subsidiary company is Bellway ...

    Profitability Ratio Bellway has achieved year-on-year turnover growth. Return on equity in 2001 experienced slight erosion in maintaining operating capital, due to damp economical climate and large purchase of stock. However, they have shown a steady increase through the 5-year period, which is part of their strategy of producing higher returns for shareholders.

  1. Discuss the extent to which the economic theories in the Market's Reader can be ...

    In the old economy, the main resources used were physical materials while in the new economy knowledge is the main resource. In the information society or "new economy", there is a barrage of information as a result of increased connectivity through communication networks, which includes consumer feedback and behavior.

  2. Monetary policy of a globalised economy

    Financial integration is seen in the accelerated pace of lending and borrowing among nations as well as in the convergence of interest rates among different countries.6 The major causes of financial market integration have been the dismantling of restrictions on capital flows among nations, cost reductions, and innovations in financial markets, particularly the use of new kinds of financial instruments.

  1. Japan - the second largest market economy in the World?

    2.4 To Make much of human resources and create an environment where human resources can display their capabilities Japan has invested heavily in developing an effective education and training system.

  2. The un-utopian issue

    These seem to be the best methods (and probably some of the very few) to address scarcity in a traditional economy. A further approach would consist in expanding the economy to obtain more production and, consequently, a greater increase in output; however, that would turn the small traditional economy into

  1. Business Cycles& the British Economy - What are business cycles?

    To a business which is considering expanding, understanding this can mean the difference between prospering and going bankrupt. What causes business cycles? There are several theories for what causes a business cycle and they are split into two categories: * External (Exogenous)

  2. Announcing mergers or acquisitions generally receive positive combined stock market revaluations.

    The Competition Commission further concluded that the main market was for weekly one-stop shopping within a 10 or 15 minute drive-time of a given retail centre and found that most multiples (ASDA being a notable exception)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work