Stock and Equity markets are one of the major parts of the financial markets. Fi

Question

Stock and Equity markets are one of the major parts of the financial markets. Financial markets bring together the entities that have surplus funds and the ones that need funds (money). It comprises of people, institutions, instruments, and procedures that bring the borrowers and savers at one platform, irrespective of their physical locations.

A market system can be defined as a network of sellers and buyers and other involved actors that are brought together to trade on a single platform. Stock markets and equity financing allows this market system to flourish in financial trade.

A direct transfer of securities and money happens when a business is selling its stocks and/or bonds to the savers/investors directly without any intermediary involved in this market system. If a brokerage firm acts as a middleman to facilitate the issuance of securities, then transfers happen through an investment banking house. Through these platforms, stock markets and equity financing bring together savers and buyers at one platform into a financial market system. Here, government, corporate, and foreign stocks and bonds are traded.

Explanation / Answer

what do stock markets and equity financing do for the market system?

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