Week 11 - How the Stock Exchange Works

Question 1

What is the stock exchange?

Answer 1

The stock exchange is a market where securities (bonds, shares, etc) may be bought and sold by interested parties

Question 2

What are the first 2 ways that make the stock exchange unlike normal public markets?

Answer 2

• ordinary members of the public are not allowed to buy and sell. only members of the stock exchange are allowed to trade
• only securities approved by the Council are allowed to be traded

Question 3

What are the other 2 ways that make the stock exchange unlike normal public markets?

Answer 3

• the public can trade on the exchange by using a member of the exchange as an agent
• the stock exchange is governed by strict regulations that are enforced by the council

Question 4

What do transactions in the stock exchange produce?

Answer 4

A lot of market data