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Now that we have understood what a stock market is, let us understand the four key financial instruments that are traded: Bonds: Companies need money to undertake projects.
Secondary Market: The share market is another place for raising money. Owning a share is akin to holding a portion of the company. Consider the previous example; your project is successful and so, you want to expand it.
Now, you sell half of your company to your brother for Rs 50,000.
This shows that stock markets in India have a strong history. Earlier, stockbrokers would converge around Banyan trees to conduct trades of stocks.It is also India’s first stock exchange and has since then played an important role in the Indian stock markets.For example, imagine you want to start a project that will start earning money in two years.To undertake the project, you will need an initial amount to get started.
A stock may be bought or sold only if it is listed on an exchange.