The document discusses the importance of share markets. It defines a share as a portion of a company's capital that entitles the holder to a proportion of the profits. A share market is where public companies' shares are traded. Share markets are important as they provide a source of business capital through public offerings of shares, promote investment in different sectors, and provide a source of funds for governments through bond issuances. Additionally, strong share markets influence positive economic perceptions that can drive foreign investment.
2. Share
It is a part or portion of a large amount which is
divided among a number of people contribute.
It is one of the equal parts into which a company’s
capital is divided, entitling the holder to a
proportion of the profits.
3. Share Market
A market in which securities are bought & sold
It is where buying & selling of share happens.
“Only Public Companies are traded in Share Market”
Hence, Share Market is a place where public companies shares are
traded.
4. Why Share Market is Important?
Following are the importance's of Share Market:
Source of Business Capital
Promotes Investment.
Source of Government funds.
Influences economic Perception.
5. Sources of Business Capital
It is the alternative of Lending.
It allow companies to raise huge amount of funds from public and helps in expansion.
As companies take loan there’s pressure to pay principal & interest but share market reduces that
burden. Company can raise funds by selling its shares and give ownership to shareholders along with
dividend from profit.
It helps in expansion of business.
6. Promotes Investment
Government motivate individuals to do investment in various sectors like
Hydropower
Agriculture
Real Estate
Research & developments
Hotels
Hospitals etc.
Individual investment in various sectors to earn good return.
7. Sources of Government Funds
Stock markets provide a trading platform for governments too.
Sometimes a local, state or national government may need more money to develop a community housing
estate, build a water treatment plant or initiate any other public projects.
Instead of increasing taxes to raise the required revenue, it can issue bonds through the stock market.
When investors buy these bonds, the government is able to raise the money it needs to launch various projects
that can ease the cost of living or even create jobs for locals.
In the long run, this improves the economy.
8. Influences Economic Perception
Countries whose stock markets are on the rise are considered to be emerging
economies, while those with established stock markets are rightfully
considered strong economies.
These perceptions drive a number of economic activities, including foreign
investments. Emerging economies, for instance, are promising grounds for
both local and foreign investors to put their money.
9. Other Importance's are as
Tax Income for Government.
Foreign Direct Investments
Monetary Mobilization.
Banking Sectors Development
Self Employment Opportunities
National Development
