Explain the following terms/concepts.
1. Stock exchange.
(1) A Stock Exchange Is also called as a Secondary Market or Stock Market or Share Market or Share Bazar. Stock Exchange is an organized market for the purchase and sale of industrial and financial security. In other words, stock exchange is an organized market for buying and selling corporate and other securities.
(2) The Indian Securities Contracts (Regulation) Act of 1956, defines Stock Exchange as, “An association, organization or body of individuals, whether Incorporated or not, established for the purpose of assisting, regulating and controlling business in buying, selling and dealing in securities.”
(1) The broker is a member of the stock exchange who deals outside the house for the purpose of bringing together his clients and Jobber. In other words, he is an intermediary for his clients who cannot deal directly on the stock exchange. Broker thus transacts business In securities on behalf of his clients.
(2) He generally deals In a large variety of securities. He receives a commission from his clients In exchange for his services. He Is an experienced agent of the public. He renders important functions In regard to deal with skilled Jobbers directly.
(1) Jobber Is the member of the stock exchange who performs Important functions. He is an Independent dealer in securities which are transacted In the market. He conducts the securities in his own name but he cannot deal directly with Investors.
(2) In other words, jobber has to deal with a broker or another jobber. He is a professional speculator who has complete information regarding the particular shares he deals. The profit he makes is his Income.
(1) He is a speculator who buys different types of shares In the expectations of rise in their price In the future. He may sell these securities at the expected higher price without their coming Into his possession.
(2) He is regarded as a potential seller in reaping of his profit. He sustains losses If the prices fall instead of rising. In India, Bull Is also known as Tejiwala.
(1) He Is also speculator who sells varlo securities for the objective of taking advantage of an expected fall In the prices. He is always In a position to Impose of security which he does not possess.
(2) in this way, he makes the profit on each transaction. He may suffer losses if the price of security rises by the date of delivery. In India, Bear Is also known as Mandiwala.