The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

What Is A Securities Stock Exchange ?

Securities exchanges are tangible institutions that act as secondary market in which outstanding securities are resold. Securities exchanges are called "stock markets", provide the marketplace in which firms can raise funds through the sale of new securities and purchasers of securities can maintain liquidity by being able to easily resell them when necessary. Although called stock markets, bonds, preferred and common stock and other investment vehicles are all traded on theses exchanges. The 2 types of security exchanges are the Organized Exchange and the Over the Counter Exchange. The most used organized exchanges are the (NYSE)New York Stock Exchange and the (AMEX)American Stock Exchange both located in New York City. The New York stock exchange is also known as the Big Board. More than 2,000 common and preferred stocks are traded here. The New York Stock Exchange is the oldest in the United States. It was founded in 1792, and is the largest. It is located on Wall Street in New York City. Other regional exchanges are the Midwest Stock Exchange in Chicogo and the Pacific Stock Exchange in San Francisco California. Trading is carried out on the floor of the exchange through an auction process. The goal of stock trading is to fill buy orders at the lowest price and fill the sell orders at the highest price.

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