What is the overall role/purpose of the stock market? How does the stock market affect the economy, investors, and corporations?
These type of questions can be answered in a more acceptable manner if there is a recommended word count given.
Overall Purpose of
the Stock Market
Stock markets provide businesses a venue for raising capital. They
allocate capital effectively to businesses that make products and
deliver services that customers need. They contribute to economic
growth, provide protection to investors, protection to
transactions, helps price securities, etc. For more details, visit:
https://finance.zacks.com/purpose-stock-market-2365.html and
http://www.yourarticlelibrary.com/economics/market/9-most-important-functions-of-stock-exchangesecondary-market/8766
among others.
Impact of Stock
Market on the Economy
A stock exchange is a reliable barometer to measure the economic
conditions of a country. Every major change in the economy is
reflected in the prices of shares. The rise or fall in the share
prices is indicative of the boom or recession cycle of the economy.
It leads to capital formation and economic growth by facilitating
investments and disinvestments, channling funds to productive
purposes.
Impact of Stock
Market on Investors
Stock markets facilitate a platform for investors to access
real-time data on stock prices and other details of issuing
companies. It provides a platform for investors to invest and
disinvest easily. It protects the investors and provides security
to transactions.
Impact of Stock
Market on Companies
Stock markets provide companies with a platform to issue securities
and to facilitate continuous transfer of securities. It helps in
pricing the securities as well. It provides companies an easy
access to capital. The penal provisions of the laws governing stock
markets protect not only the investors but also the companies from
unwarranted price manipulation, insider trading, etc.
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