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, , Basics of Stock Trading, .
, , Basics of Stock Trading, .
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Hi,
Refer the last question- Does stock price affect the monetary aspects of the company? How?
Actually, the company gets the money during IPO and price changes of stock affects only the buyers and sellers of the stock. so, the stock price may not impact the performance of the company, but the performance of the company may influence the stock price.
Hence the stock price is driven by company performance and the company does not affected by the buying and selling the shares.
However, the share price may have indirect impact in the company performance for example, a declining share price will make it hard to get loan, can’t attract further investors, difficult to build partnerships, goodwill etc…
Q) How stock exchanges ensure the traders counter party risk?
Counter party risks are ensured with the help of Stock Brokers who acts as an intermediate between Exchange Board and the Trader.