2. Equity market is another name for a
stock market.
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3. The term equity also refers to the value
of someone’s ownership of a
business, property, or a shareholder’s
partial ownership in a business.
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4. An equity is a stock or stock share not
bearing fixed interest.
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5. In other words an equity’s value rises
and falls with that of a company and its
shares. It does not pay guaranteed
interest as with a bond.
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6. Use of the term equity market reminds
us that a stock market investment is
owning shares of a company’s assets.
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7. An equity market is a public market
where stocks are listed, bought, and
sold.
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8. An equity market, or stock market, has
members who do the buying and selling.
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9. Everyone else pays a commission for this
service in order to buy stock or sell
stock.
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10. Now, in the computer age, exchanges
such as the NASDAQ are virtual and all
activity is in a computer system.
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11. This contrasts with the traditional
“outcry” system of the New York Stock
Exchange (NYSE) where orders flow
through a real person, a floor broker.
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12. Equity markets allow companies to raise
money without borrowing.
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13. Rather than incurring debt the company
sells ownership shares, giving away
future profits and giving a vote in the
affairs of the company for each share.
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14. Although a public stock company may
not incur debt by issuing stock, it always
runs the risk of a takeover.
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15. An outside party can purchase a
sufficient number of stock shares to
control the company’s board of
directors, name its own management
and take over the company.
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16. Besides allowing a company to raise
money, equity exchanges offer very
liquid investments.
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17. Stocks are almost always easier to buy
and sell and a clear market value than
real estate, for example.
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18. There are equity exchanges throughout
the world.
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19. The New York Stock Exchange and
NASDAQ are the two large American
exchanges.
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20. Canada has the Toronto Stock Exchange.
European exchanges include the London
Stock Exchange, the Paris Bourse, and
the Deutsche Börse.
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21. Asia has the Hong Kong Stock
Exchange, the Tokyo Stock Exchange, the
Bombay Stock Exchange, and the
Shanghai Stock Exchange.
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22. In Latin America there are the
BM&FBovespa in Sao Paolo, Brazil and
BMV, the Bolsa Mexicana de Valores.
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23. In the United States market indexes such
as the S&P 500 help traders and
investors follow the market sectors.
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24. A problem with dealing in many equity
markets outside of the United States is
the lack of transparency.
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25. The United States Securities and
Exchange Commission (SEC) oversees
American stock markets, helping to
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26. insure that illegal insider trading, for
example, does not enrich some at the
expense of others.
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27. Although the SEC does not do a perfect
job it provides an oversight that is sadly
missing in many markets outside of the
United States.
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28. Even basic stock information may be
lacking on some foreign exchanges.
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29. Unless the investor has excellent inside
information in some foreign
exchanges, the best stock market
investing strategy may well be to trade
and invest at home.
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30. Trading in the equity market requires
learning the basics of stock market
investing.
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31. As stock prices move up and down
traders and investors buy stock and sell
stock in search of a profit.
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32. A day trader will buy and sell within a
day, typically holding no stock positions
overnight.
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33. Long term investing engages in
techniques like value stock investing in
order to capture a stock at a low price
and allow it to appreciate in value over
many years.
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