Question-56
When Stock prices go down, where does the money go?
Introduction:
Stock Market:
A stock market or equity market is a public entity (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.
Importance of stock market:
The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional financial capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate.
History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up-and-coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development.
Why the stock market crashes??
A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic and investing public's loss of confidence. Often, stock market crashes end speculative economic bubbles.
One of the most famous stock market crashes started October 24, 1929 on Black Thursday. The Dow Jones Industrial lost 50 % during this stock market crash. It was the beginning of the Great Depression. Another famous crash took place on October 19, 1987 – Black Monday. The crash began in
By the end of October, stock markets in Hong Kong had fallen 45.5 %,Australia 41.8%,Spain 31%,The United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%.Black Monday itself was the largest one-day percentage decline in stock market history – the Dow Jones fell by 22.6% in a day. The names “Black Monday” and “Black Tuesday” are also used for October 28–29 1929, which followed Terrible Thursday—the starting day of the stock market crash in 1929.
where has all the money gone?
In some senses, the answer is relatively simple. Much of that cash has gone into repairing a broken financial system. Some has gone towards repairing banks' balance sheets. Some has contributed to bank lending. But its effects have been to soothe the financial pain rather than completely curing it. And precious little of the money has filtered back into lending to households.
· Submitted to
Mr. Gurdeepak Singh
· Submitted By
Varun Karwal
MBA- 1st Sem (A)
Varun Topic was very interesting and I expected a good response.....a good try but title not as per guidelines and poor referencing with no discussion and conclusion part....
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