The importance of securities market can be jotted down into two basic points.
- Issuing Shares / Stock
A company needs money for inception and expansion. It can get a loan from bank. But then it would owe money. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow and expand.
- Buying Shares / Stock
Owning stock in a company means owning part of that company. Each part is known as a share. If a company has issued 100 shares of stock, and you bought one, you own 1% of that company. Stockholders hope the company will earn more money as it grows. If a company earns money, the stockholders share the profit. Over time, people usually earn more money from owning stock than from deposits in the bank, bonds or other investments.
