What is Stock Traded on the Stock Exchange? Definition of Stock Traded on the Stock Exchange, Stock Traded on the Stock Exchange Meaning
The quoted or listed stock is a security that can be freely bought and sold on the stock market. They are issued on the primary market and then traded on the secondary market .
Companies put shares into circulation in order to raise funds from the public. Thus, when the investor obtains one of these titles, he is acquiring a small participation in the company.
The owner of the share also has the right to receive dividends and vote at the general meeting of partners . You could even have a preference to buy new titles of the company in case the capital is increased.
Characteristics of the stock listed on the stock market
The main characteristics of the shares listed on the stock market are:
- Liquidity : They can be traded easily. In this way, the owner can get rid of it (s) almost immediately if he considers, for example, that the firm in question has made a bad business decision.
- Risk: Uncertainty is an intrinsic characteristic of publicly traded stocks. This, given that the investor does not know precisely the return or dividend that he is going to receive. At this point, it should be noted that the main risk to which a share is exposed is that its price falls. This can happen for many variables, internal or external to the company.
Market price: The price of a share depends on the market value of the company. That is, it is calculated objectively.
Types of publicly traded shares
There are several types of stocks listed on the stock market, depending on their level of risk:
- Defensive: They are titles whose price does not vary much over time. This, because the company's income is relatively stable.
- High growth: These are stocks with upward expectations in the medium and long term. These are high-risk businesses such as those related to technology.
- Blue Chips: They are titles of solid companies that have a good position in their sector and that have the highest liquidity in the stock market. Example: Repsol in Spain.
- High speculation : They are small companies with low market capitalization . Their common denominator is high speculation and media publicity. Therefore, it is dangerous to invest in them, especially for small investors.