Individual Stocks

Understanding Financial Markets

What is the basis of our financial markets?

The basis of our financial markets, a key component of our economic system, is needs-driven. For example, a financial institution may need capital, and must then find an intermediary to obtain this capital. At the same time, a corporation may need capital to retool an old factory, and seeks it from a financial institution. A corporation may also need to raise capital through the sale of its equity, using a price determined by the perceived value of the company’s ability to be profitable, as well as the inherent value of the company’s products or services, its assets and liabilities, the supply and demand for equity of similar companies, and the broad economic conditions when the company makes the offer, among many other variables.


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