Agriculture in Stock Exchange – JSS3 Agricultural Science Lesson Note (Second Term)

Agriculture in stock exchange

A stock exchange is an organized market where stock brokers and traders can buy and sell stocks (also called shares), bonds, and other securities. It is also called capital market, stock market, or share market. Buyers and sellers come together to trade during specific hours on business days. Hence a stock exchange is a medium for buyers and sellers to interact with one another. 

Definition

Stock exchange is an association or organization of individuals established to assist, assist, regulate, and control buying, selling, and dealing in securities. 

Features of stock exchange

1.   Organized market
2.   Central government recognition
3.   Specific location
4.   Transaction carried out only through members
5.   Deals with listed securities
6.   Regulates trade in security
7.   Association of persons

Aims and Objectives of the Stock Exchange

1.   Raising capital
2.   To facilitate trading of securities
3.   To regulate and supervise stock exchange or trading
4.   To provide facilities for trading in security

People involved in the stock exchange

People involved in the stock exchange are called stock traders, equity traders, or share traders. They include stock brokers, investors, hedgers, speculators, dealers, and arbitrageurs.

1.    Investor
2.    Dealers
3.   Stock brokers
4.    Arbitrageurs
5.     Speculators
6.      Hedgers

Types of stock exchange 

The stock exchange (capital market) is divided into two types

These are the Primary market and the secondary market.

1.   Primary Market: this is also called the new issue market (NIM). It is a capital market where newly issued securities are offered to the public. In a primary market, a transaction (buying and selling of securities) takes place directly between the issuer and buyers or investors for the first time.

The primary market usually raises capital through the following means.

1.     Public issue
2.   Right issue
3.     Private placement
4.   Preferential allotment

Features of the Primary market

1.           It is a market for new, long-term capital
2.         Securities are issued by the company directly to investors
3.    The company issues certificates to investors (buyers)
4.      It is usually used for selling up new businesses or expanding existing ones 

Secondary market

This is a market where investors trade (buy and sell) securities they already own without the involvement of the company that issued the securities in the primary market. It is also called “aftermarket” because it is where the securities issued at the primary market are bought and sold.

There are two types of secondary market. These are auction markets and dealer markets.

1.     Auction market
2.   Dealer market

Features of the Secondary market

1.       It creates liquidity (means of converting security to cash)
2.       It is a security market for previously issued securities
3.  It comes up after the primary market
4.     Securities are not issued directly by the company to investors in a secondary market.

Importance of stock exchange in agriculture

Agricultural stock exchange is a mutual organization which is engaged in agricultural commodities such as agricultural products and machines. It is very important for several reasons. Some of these include the following. 

1.           Capital Formation
2.           Savings culture
3.   Security market
4.     Investment opportunity
5.    Control of agricultural business
6.     Better performance