Before going in detail with the stock market, let us see what the meaning of the market is. We all go to the market and shopping regularly. A market is commonplace for the people, who buy and sell, in simple terms, it is a commonplace, where buyers and sellers do meet to exchange the stock or goods, by buying and selling, etc.
The stock market is also called as the equity market, and it is the best place, where aggregation of both the buyers and sellers take place. The first thing that comes in our minds when we hear or talk about the stock market shares. Shares are not a physical place of property or asset, but in heavier terms, it is an economic transaction with the loose network. One thing that to be understood is that the stock market is a public market, where anyone can invest, and anyone can get to see the updated and current state of the economic status of their shares. The stock market in simple market terms is a market, where the exchange of stock happens between the seller and buyer, but not physically.
Ok, then, when the stock is not seen and touched, how it is traded or exchanged between seller and buyer? The stock is of two types. It is traded either as bonds or shares. When we buy stocks, in the form of bonds, it means we are lending the money in a company, organization, bank or even to the government. Since the moneylender gets the interest as the benefit, here buyer of the shares also gets the interest, on that particular bond. So, bonds are the written, guaranteed promise of the money spent in the form of lending the money. And the other type of stock is share. Shares are different from the bonds, in the way that shares investments as it is considered as a small piece of the organization or company. We go to the stock market to invest either in the form of the IPO or Initial Public Offering or invest for the company in the way of new stock. It is all about raising the new funds to the specific company.
If it is just buying and selling or simply buying the bonds to invest in the companies, governments, etc. it could be no different from other kinds of economic transaction. There is a lot more beyond that. There are two stages of exchange of the stock happens, between the seller and buyer. When you or I take the bond or share directly from the company, governments, etc. it becomes part of the primary function, and you or I become the primary issuer. The story does not end here. There is a secondary market for the secondary function. You or I, being an investor of the company can become the seller and pass on the ownership to another investor and get the benefit, updated till that date, based on the progress and profit of the company.