An equity market is a market in which shares are issued and traded, either through exchanges or over-the-counter markets. Also known as the stock market, it is one of the most vital areas of a market economy because it gives companies access to capital and investors a slice of ownership in a company with the potential to realize gains based on its future performance.
BREAKING DOWN 'Equity Market' :-
Equity markets are the meeting point for buyers and sellers of stocks. The securities traded in the equity market can be either public stocks, which are those listed on the stock exchange, or privately traded stocks. Often, private stocks are traded through dealers, which is the definition of an over-the-counter market.
Trading in the Equity Market :-
In the equity market, investors bid for stocks by offering a certain price, and sellers ask for a specific price. When these two prices match, a sale occurs. Often, there are many investors bidding on the same stock. When this occurs, the first investor to place the bid is the first to get the stock. When a buyer will pay any price for the stock, he or she is buying at market value; similarly, when a seller will take any price for the stock, he or she is selling at market value.
Stock Exchanges :-
The place where stocks in the equity market are traded is the stock exchange. There are many stock exchanges around the world, and they can be either physical places or virtual gathering spots. NASDAQ is an example of a virtual trading post, in which stocks are traded electronically through a network of computers. Electronic stock exchanges often include a market maker, which is a broker-dealer company that both buys and sells stocks in order to facilitate trading for a particular stock. This comes at a risk to the company, but it makes the exchange process for a given stock operate more smoothly.