THE Role of the SECONDARY MARKET IN EQUITIES

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Equity capital, in contrast to debt capital, is not repaid to the investors in the normal course of business; the issuer does not As a rule return it to the investor 2 and therefore there have to be a means by which the trader can actualize its capital earnings, or sell its holding to stop further losses. For this purpose, stock exchanges provide a marketplace for traders to buy and sell stocks of companies in which they are interested.This marketplace is known ass the secondary market, to distinguish it from the primary allocation of shares by the company. Equity capital is essentially a derivative of the actual market.

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