In this article we'll examine the key characteristics of the stock exchange. Stocks are traded either on an exchange (a physical place) or on the counter (OTC) between agents through computers. Shares of smaller companies, many bonds, and also mutual funds are usually traded OTC. Normally the shares of larger companies are traded on stock exchanges. The largest and most well known stock market is that the New York Stock Exchange (www.nyse.com). It is located at 11 Wall Street in the financial district of lower downtown Manhattan of nyc. Many nations around the world have their own stock trades.

Stocks and bonds are bought and sold through agents who receive a commission on each securities transaction. The bond and stock markets are heavily controlled. In the U.S. the primary securities regulator is the U.S. Securities & Exchange Commission (www.sec.gov).

Another important topic for an comprehension of the stock market is understanding about the Dow. The "marketplace" in this context is usually with regard to this Dow Jones Industrial Average and is well known only as "The "Dow. So what is the Dow? It is an index (group of shares) representing the worth of the 30 largest public companies in the U.S., including IBM, Exxon Mobil, etc.. The Dow was made by Charles Dow and Edward Jones several years back. It acts like a barometer of the state of the economy. The Dow (and the value of stocks) are affected by investors' psychological factors (for example, investor confidence), economic and political events, wars, and disasters.

There are other indexes aside from the Dow. Are there so many? The indexes are groups of shares which act as performance benchmarks for money managers, like individuals who manage mutual funds. Mutual funds may have portfolios of big company stocks, small company stocks or a combination. If a mutual fund's investment objective is to invest in smaller sized businesses, the fund manager wouldn't use the Dow as a benchmark but another indicator, since the Dow is an index of large company stocks.