- Stock exchanges began when owners of companies, their investors, attorneys and business brokers gathered to buy, sell and trade the ownership shares of companies.
- Stock exchanges provide a way for investors to sell their investments in a regulated, public and liquid marketplace. Because of this it is part of the capital formation process to fund the establishment and growth of commercial enterprise.
- A liquid market in stocks provides a valuation of those stocks based on what the buyer will pay to own a portion of a company vs. what the owner thinks that ownership share is worth based on the future prospects of the company.
- Exchange pricing allows other financial institutions to regard stock as liquid assets, allowing banks to accept it as collateral against loans.
- New companies and existing public companies can attract investment capital by selling their shares for trading on an exchange. This means the exchanges are a vital basis for the successful functioning of capitalism as an economic system.
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