What Are Stocks, and How Do Prices on the Stock Market Move? – You must have heard the word stocks, whether it’s on TV, from friends, or about the next door who offers you an investment. But what we will discuss in this article is one of the instruments listed on the Indonesian stock exchange, for those of you who don’t know what the IDX is, can you read it here, or don’t you know the meaning of the word investment itself? can learn the basics first here.
What Are Stocks?
In general, the meaning of shares is a certificate of ownership of a company. The holder is entitled to the company’s assets, be it debt or profit, according to the percentage of the number of shares held. As shareholders, we have the power to control the company.
However, if there are too many shareholders, of course, this will result in a difficult management process. Therefore, the shareholders delegate the power to manage shares to the managers, then this party will be responsible to the shareholders.
Every year the company holds a General Meeting of Shareholders (GMS) to make decisions, such as selecting the board of directors, dividing the number of dividends, or acquiring other companies. Usually, one share has one vote.
Why Stocks Move?
There are two types of companies themselves, first public (open) and private (closed). Public companies are companies that have traded their shares on the stock exchange and can be purchased by anyone who has capital. Meanwhile, a closed company conducts share sales transactions internally and the public cannot arbitrarily own the shares of the company. Public companies can be distinguished from private companies, by the inscription of TBK which means open.
How Can Prices in the Stock Market Move up and Down?
First, the primary market is the process of offering shares of companies that are about to go public for the first time, this primary market is also often referred to as an Initial Public Offering (IPO). This market refers to a meeting between prospective buyers and sellers of shares. The characteristics of this market are,
- Fixed share price
- Not subject to commission
- Only applies to the share purchase process
- Orders are made through a sales agent
- Limited period
The second is the secondary market, which is often referred to as the secondary market, which is a place for company shares that have been circulating in the wider community. Here, the only parties involved are investors who want to sell their shares with investors who want to buy shares in the company.
Price priority means that whoever enters a request order with the highest bid price, will get top priority to be able to “transact” with whoever enters the bid order at the lowest offer price. Time priority means that whoever makes the bid price or offer price first will get priority for the matching process to occur. Prices in the stock market move because of the continuous supply and demand processes.