A stock exchange, securities exchange or bourse, is a facility where stock brokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Stock exchanges may provide for facilities the issue and redemption of such securities and instruments and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts, pooled investment products and bonds. Stock exchanges function as "continuous auction" markets with buyers and sellers consummating transactions via open outcry at a central location such as the floor of the exchange or by using an electronic trading platform. To be able to trade a security on a certain stock exchange, the security must be listed there. There is a central location at least for record keeping, but trade is less linked to a physical place, as modern markets use electronic communication networks, which give them advantages of increased speed and reduced cost of transactions.
Trade on an exchange is restricted to brokers. In recent years, various other trading venues, such as electronic communication networks, alternative trading systems and "dark pools" have taken much of the trading activity away from traditional stock exchanges. Initial public offerings of stocks and bonds to investors is done in the primary market and subsequent trading is done in the secondary market. A stock exchange is the most important component of a stock market. Supply and demand in stock markets are driven by various factors that, as in all free markets, affect the price of stocks. There is no obligation for stock to be issued through the stock exchange itself, nor must stock be subsequently traded on an exchange; such trading may be off over-the-counter. This is the usual way that bonds are traded. Stock exchanges are part of a global securities market. Stock exchanges serve an economic function in providing liquidity to shareholders in providing an efficient means of disposing of shares.
The idea of debt dates back to the ancient world, as evidenced for example by ancient Mesopotamian city clay tablets recording interest-bearing loans. There is little consensus among scholars as to; some see the key event as the Dutch East India Company's founding in 1602, while others point to earlier developments. Economist Ulrike Malmendier of the University of California at Berkeley argues that a share market existed as far back as ancient Rome. One of Europe's oldest stock exchanges is the Frankfurt Stock Exchange established in 1585 in Frankfurt am Main. In the Roman Republic, which existed for centuries before the Empire was founded, there were societates publicanorum, organizations of contractors or leaseholders who performed temple-building and other services for the government. One such service was the feeding of geese on the Capitoline Hill as a reward to the birds after their honking warned of a Gallic invasion in 390 B. C. Participants in such organizations had partes or shares, a concept mentioned various times by the statesman and orator Cicero.
In one speech, Cicero mentions "shares that had a high price at the time". Such evidence, in Malmendier's view, suggests the instruments were tradable, with fluctuating values based on an organization's success; the societas declined into obscurity in the time of the emperors, as most of their services were taken over by direct agents of the state. Tradable bonds as a used type of security were a more recent innovation, spearheaded by the Italian city-states of the late medieval and early Renaissance periods. While the Italian city-states produced the first transferable government bonds, they did not develop the other ingredient necessary to produce a fully-fledged capital market: the stock market in its modern sense. In the early 1600s the Dutch East India Company became the first company in history to issue bonds and shares of stock to the general public; as Edward Stringham notes, "companies with transferable shares date back to classical Rome, but these were not enduring endeavors and no considerable secondary market existed."
The VOC, formed to build up the spice trade, operated as a colonial ruler in what is now Indonesia and beyond, a purview that included conducting military operations against the wishes of the exploited natives and of competing colonial powers. Control of the company was held by its directors, with ordinary shareholders not having much influence on management or access to the company's accounting statements. However, shareholders were rewarded well for their investment; the company paid an average dividend of over 16% per year from 1602 to 1650. Financial innovation in Amsterdam took many forms. In 1609, investors led by Isaac Le Maire formed history's first bear market syndicate, but their coordinated trading had only a modest impact in driving down share prices, which tended to remain robust throughout the 17th century. By the 1620s, the company was expanding its securities issuance with the first use of corporate bonds. Joseph de la Vega known as Joseph Penso de la Vega and by other variations of his name, was an Amsterdam trader from a Spanish Jewish family and a prolific writer as well as a successful businessman in 17th-century Amsterdam.
His 1688 book Confusion of Confusions explained the workings of the city's stock market. It was the earliest book about stock trading and inner workings of a stock market, taking the form of a dialogue between a merchant, a shareholder and a philosopher, the book described a market, sophisticated but prone to excesses, de la Vega of
In finance, a futures contract is a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other. The asset transacted is a commodity or financial instrument; the predetermined price the parties agree to buy and sell the asset for is known as the forward price. The specified time in the future—which is when delivery and payment occur—is known as the delivery date; because it is a function of an underlying asset, a futures contract is a derivative product. Contracts are negotiated at futures exchanges, which act as a marketplace between buyers and sellers; the buyer of a contract is said to be long position holder, the selling party is said to be short position holder. As both parties risk their counter-party walking away if the price goes against them, the contract may involve both parties lodging a margin of the value of the contract with a mutually trusted third party. For example, in gold futures trading, the margin varies between 2% and 20% depending on the volatility of the spot market.
The first futures contracts were negotiated for agricultural commodities, futures contracts were negotiated for natural resources such as oil. Financial futures were introduced in 1972, in recent decades, currency futures, interest rate futures and stock market index futures have played an large role in the overall futures markets; the original use of futures contracts was to mitigate the risk of price or exchange rate movements by allowing parties to fix prices or rates in advance for future transactions. This could be advantageous when a party expects to receive payment in foreign currency in the future, wishes to guard against an unfavorable movement of the currency in the interval before payment is received. However, futures contracts offer opportunities for speculation in that a trader who predicts that the price of an asset will move in a particular direction can contract to buy or sell it in the future at a price which will yield a profit; the Dutch pioneered several financial instruments and helped lay the foundations of the modern financial system.
In Europe, formal futures markets appeared in the Dutch Republic during the 17th century. Among the most notable of these early futures contracts were the tulip futures that developed during the height of the Dutch Tulipmania in 1636; the Dōjima Rice Exchange, first established in 1697 in Osaka, is considered by some to be the first futures exchange market, to meet the needs of samurai who—being paid in rice, after a series of bad harvests—needed a stable conversion to coin. The Chicago Board of Trade listed the first-ever standardized'exchange traded' forward contracts in 1864, which were called futures contracts; this contract was based on grain trading, started a trend that saw contracts created on a number of different commodities as well as a number of futures exchanges set up in countries around the world. By 1875 cotton futures were being traded in Bombay in India and within a few years this had expanded to futures on edible oilseeds complex, raw jute and jute goods and bullion; the 1972 creation of the International Monetary Market, the world's first financial futures exchange, launched currency futures.
In 1976, the IMM added interest rate futures on US treasury bills, in 1982 they added stock market index futures. Although futures contracts are oriented towards a future time point, their main purpose is to mitigate the risk of default by either party in the intervening period. In this vein, the futures exchange requires both parties to put up initial cash, or a performance bond, known as the margin. Margins, sometimes set as a percentage of the value of the futures contract, must be maintained throughout the life of the contract to guarantee the agreement, as over this time the price of the contract can vary as a function of supply and demand, causing one side of the exchange to lose money at the expense of the other. To mitigate the risk of default, the product is marked to market on a daily basis where the difference between the initial agreed-upon price and the actual daily futures price is re-evaluated daily; this is sometimes known as the variation margin, where the futures exchange will draw money out of the losing party's margin account and put it into that of the other party, ensuring the correct loss or profit is reflected daily.
If the margin account goes below a certain value set by the exchange a margin call is made and the account owner must replenish the margin account. This process is known as marking to market, thus on the delivery date, the amount exchanged is not the specified price on the contract but the spot value. Upon marketing, the strike price is reached and creates lots of income for the "caller." To minimize credit risk to the exchange, traders must post a margin or a performance bond 5%-15% of the contract's value. Unlike use of the term margin in equities, this performance bond is not a partial payment used to purchase a security, but a good-faith deposit held to cover the day-to-day obligations of maintaining the position. To minimize counterparty risk to traders, trades executed on regulated futures exchanges are guaranteed by a clearing house; the clearing house becomes the buyer to each seller, the seller to each buyer, so that in the event of a counterparty default the clearer assumes the risk of loss.
This enables traders to transact without performing due diligence on their counterparty. Margin requirements are waived or reduced in some cases for hedgers who have physical ownership of the covered commodity or spread traders who hav
Reformation in Switzerland
The Protestant Reformation in Switzerland was promoted by Huldrych Zwingli, who gained the support of the magistrate and population of Zürich in the 1520s. It led to significant changes in civil life and state matters in Zürich and spread to several other cantons of the Old Swiss Confederacy. Seven cantons remained Roman Catholic, which led to inter-cantonal wars known as the Wars of Kappel. After the victory of the Catholic cantons in 1531, they proceeded to institute counter-reformatory policies in some regions; the schism and distrust between Catholic and Protestant cantons would define their interior politics and paralyse any common foreign policy until well into the 18th century. Despite their religious differences, despite an Catholic defence alliance of the seven Catholic cantons, further major armed conflicts directly between the cantons did not occur. Soldiers from both sides fought in the French Wars of Religion. In the Thirty Years' War, the thirteen cantons managed to maintain their neutrality because all major powers in Europe depended on Swiss mercenaries, would not let Switzerland fall into the hands of one of their rivals.
The Three Leagues of the Grisons, at that time not yet a member of the confederacy, were involved in the war from 1620 on, which led to their loss of the Valtellina from 1623 to 1639. After the violent conflicts of the late 15th century the Swiss cantons had had a generation of relative political stability; as part of their struggle for independence, they had in the 15th century sought to limit the influence of the Church on their political sovereignty. Many monasteries had come under secular supervision, the administration of schools was in the hands of the cantons, although the teachers still were priests. Many of the problems of the Church existed in the Swiss Confederacy. Many a cleric as well as the Church as a whole enjoyed a luxurious lifestyle in stark contrast to the conditions the large majority of the population lived in. Many priests were badly educated, spiritual Church doctrines were disregarded. Many priests did not live in concubinage; the new reformatory ideas thus fell on fertile ground.
The main proponent of the Reformation in Switzerland was Ulrich Zwingli, whose actions during the Affair of the Sausages are now considered to be the start of the Reformation in Switzerland. His own studies, in the renaissance humanist tradition, had led him to preach against injustices and hierarchies in the Church in 1516 while he was still a priest in Einsiedeln; when he was called to Zürich, he expanded his criticism onto political topics and in particular condemned the mercenary business. His ideas were received favourably by entrepreneurs and the guilds; the first disputation of Zürich of 1523 was the breakthrough: the city council decided to implement his reformatory plans and to convert to Protestantism. In the following two years, profound changes took place in Zürich; the Church was secularised. Priests were relieved from celibacy, the opulent decorations in the churches were thrown out; the state assumed the administration of Church properties, financing the social works, paid the priests.
The last abbess of the Fraumünster, Katharina von Zimmern, turned over the convent including all of its rights and possessions to the city authorities on 30 November 1524. She married the next year. Over the next few years, the cities of St. Gallen, Basel, Bienne and Bern all followed the example set by Zürich, their subject territories were converted to Protestantism by decree. In Basel, reformer Johannes Oecolampadius was active, in St. Gallen, the Reformation was adopted by mayor Joachim Vadian. In Glarus, in the Grisons, which all three had a more republican structure, individual communes decided for or against the Reformation. In the French-speaking parts, reformers like William Farel had been preaching the new faith under Bernese protection since the 1520s, but only in 1536, just before John Calvin arrived there, did the city of Geneva convert to Protestantism; the same year, Bern conquered the hitherto Savoyard Vaud and instituted Protestantism there. Despite their conversion to Protestantism, the citizens of Geneva were not ready to adopt Calvin's new strict Church order, banned him and Farel from the city in 1538.
Three years later—there had been elections in the meantime, there was a new city council—Calvin was called back. Step by step he implemented his strict programme. A counter-revolt in 1555 failed, many established families left the city. Zwingli, who had studied in Basel at the same time as Erasmus, had arrived at a more radical renewal than Luther and his ideas differed from the latter in several points. A reconciliation attempt at the Marburg Colloquy in 1529 failed. Although the two charismatic leaders found a consensus on fourteen points, they kept differing on the last one on the Eucharist: Luther maintained that through sacramental union the bread and wine in the Lord's Supper became the flesh and blood of Christ, whereas Zwingli considered bread and wine only symbols; this schism and the defeat of Zürich in the Second War of Kappel in 1531, where Zwingli was killed on the battlefield, were a serious setback limiting Zwinglianism to parts of the Swiss confederacy and preventing its adoption in areas north of the Rhine.
After Zwingli's death, Heinrich Bullinger took over his post in Zürich. Reformers in Switzerland continued for the next decades to reform the Church and to improve its ac
Chief executive officer
The chief executive officer or just chief executive, is the most senior corporate, executive, or administrative officer in charge of managing an organization – an independent legal entity such as a company or nonprofit institution. CEOs lead a range of organizations, including public and private corporations, non-profit organizations and some government organizations; the CEO of a corporation or company reports to the board of directors and is charged with maximizing the value of the entity, which may include maximizing the share price, market share, revenues or another element. In the non-profit and government sector, CEOs aim at achieving outcomes related to the organization's mission, such as reducing poverty, increasing literacy, etc. In the early 21st century, top executives had technical degrees in science, engineering or law; the responsibility of an organization's CEO are set by the organization's board of directors or other authority, depending on the organization's legal structure.
They can be far-reaching or quite limited and are enshrined in a formal delegation of authority. Responsibilities include being a decision maker on strategy and other key policy issues, leader and executor; the communicator role can involve speaking to the press and the rest of the outside world, as well as to the organization's management and employees. As a leader of the company, the CEO or MD advises the board of directors, motivates employees, drives change within the organization; as a manager, the CEO/MD presides over the organization's day-to-day operations. The term refers to the person who makes all the key decisions regarding the company, which includes all sectors and fields of the business, including operations, business development, human resources, etc; the CEO of a company is not the owner of the company. In some countries, there is a dual board system with two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes. In these countries, the CEO presides over the executive board and the chairman presides over the supervisory board, these two roles will always be held by different people.
This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority; the aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person. In the United States, the board of directors is equivalent to the supervisory board, while the executive board may be known as the executive committee. In the United States, in business, the executive officers are the top officers of a corporation, the chief executive officer being the best-known type; the definition varies. In the case of a sole proprietorship, an executive officer is the sole proprietor. In the case of a partnership, an executive officer is a managing partner, senior partner, or administrative partner. In the case of a limited liability company, executive officer is any manager, or officer. A CEO has several subordinate executives, each of whom has specific functional responsibilities referred to as senior executives, executive officers or corporate officers.
Subordinate executives are given different titles in different organizations, but one common category of subordinate executive, if the CEO is the president, is the vice-president. An organization may have more than one vice-president, each tasked with a different area of responsibility; some organizations have subordinate executive officers who have the word chief in their job title, such as chief operating officer, chief financial officer and chief technology officer. The public relations-focused position of chief reputation officer is sometimes included as one such subordinate executive officer, but, as suggested by Anthony Johndrow, CEO of Reputation Economy Advisors, it can be seen as "simply another way to add emphasis to the role of a modern-day CEO – where they are both the external face of, the driving force behind, an organisation culture". In the US, the term chief executive officer is used in business, whereas the term executive director is used in the not-for-profit sector; these terms are mutually exclusive and refer to distinct legal duties and responsibilities.
Implicit in the use of these titles, is that the public not be misled and the general standard regarding their use be applied. In the UK, chief executive and chief executive officer are used in both business and the charitable sector; as of 2013, the use of the term director for senior charity staff is deprecated to avoid confusion with the legal duties and responsibilities associated with being a charity director or trustee, which are non-executive roles. In the United Kingdom, the term director is used instead of chief officer". Business publicists since the days of Edward Bernays and his client John D. Rockefeller and more the corporate publicists for Henry Ford, promoted the concept of the "celebrity CEO". Business journalists have adopted this approach, which assumes that the corporate achievements in the arena of manufacturing, wer
Market capitalization is the market value of a publicly traded company's outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding; as outstanding stock is bought and sold in public markets, capitalization could be used as an indicator of public opinion of a company's net worth and is a determining factor in some forms of stock valuation. Market cap reflects only the equity value of a company, it is important to note that a firm's choice of capital structure has a significant impact on how the total value of a company is allocated between equity and debt. A more comprehensive measure is enterprise value, which gives effect to outstanding debt, preferred stock, other factors. For insurance firms, a value called. Market capitalization is used by the investment community in ranking the size of companies, as opposed to sales or total asset figures, it is used in ranking the relative size of stock exchanges, being a measure of the sum of the market capitalizations of all companies listed on each stock exchange.
In performing such rankings, the market capitalizations are calculated at some significant date, such as June 30 or December 31. The total capitalization of stock markets or economic regions may be compared with other economic indicators; the total market capitalization of all publicly traded companies in the world was US$51.2 trillion in January 2007 and rose as high as US$57.5 trillion in May 2008 before dropping below US$50 trillion in August 2008 and above US$40 trillion in September 2008. In 2014 and 2015, global market capitalization was US$68 trillion and US$67 trillion, respectively. Market cap is given by the formula MC = N × P, where MC is the market capitalization, N is the number of shares outstanding, P is the closing price per share. For example, if a company has 4 million shares outstanding and the closing price per share is $20, its market capitalization is $80 million. If the closing price per share rises to $21, the market cap becomes $84 million. If it drops to $19 per share, the market cap falls to $76 million.
This is in contrast to mercantile pricing where purchase price, average price and sale price may differ due to transaction costs. Not all of the outstanding shares trade on the open market; the number of shares trading on the open market is called the float. It is equal to or less than N; the free-float market cap uses just the floating number of shares in the calculation resulting in a smaller number. Traditionally, companies were divided into large-cap, mid-cap, small-cap; the terms mega-cap and micro-cap have since come into common use, nano-cap is sometimes heard. Different numbers are used by different indexes; the cutoffs may be defined as percentiles rather than in nominal dollars. The definitions expressed in nominal dollars need to be adjusted over decades due to inflation, population change, overall market valuation, market caps are to be different country to country. List of corporations by market capitalization List of finance topics List of stock exchanges London Stock Exchange Market price Market trend Middle-market company NASDAQ New York Stock Exchange Public float Shares authorized Treasury stock How to Value Assets – from the Washington State government web site Year-end market capitalization by country – World Bank, 1988–2010
Stock market index
A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks, it is a tool used by investors and financial managers to describe the market, to compare the return on specific investments. Two of the primary criteria of an index are that it is investable and transparent: the method of its construction should be clear. Many mutual funds and exchange-traded funds attempt to "track" an index with varying degrees of success; the difference between an index fund's performance and the index is called tracking error. Stock market indices may be classified in many ways. A'world' or'global' stock market index — such as the MSCI World or the S&P Global 100 — includes stocks from multiple regions. Regions may be defined geographically or by levels of income. A'national' index represents the performance of the stock market of a given nation—and by proxy, reflects investor sentiment on the state of its economy; the most quoted market indices are national indices composed of the stocks of large companies listed on a nation's largest stock exchanges, such as the American S&P 500, the Japanese Nikkei 225, the Indian NIFTY 50, the British FTSE 100.
Other indices may be regional, such as the FTSE Developed Europe Index or the FTSE Developed Asia Pacific Index. Indexes may be based on exchange, such as the NASDAQ-100 or NYSE US 100, or groups of exchanges, such as the Euronext 100 or OMX Nordic 40; the concept may be extended well beyond an exchange. The Wilshire 5000 Index, the original total market index, represents the stocks of nearly every publicly traded company in the United States, including all U. S. stocks traded on NASDAQ and American Stock Exchange. Russell Investment Group added to the family of indices by launching the Russel Global Index. More specialized indices exist tracking the performance of specific sectors of the market; some examples include the Wilshire US REIT which tracks more than 80 American real estate investment trusts and the Morgan Stanley Biotech Index which consists of 36 American firms in the biotechnology industry. Other indices may track companies of a certain size, a certain type of management, or more specialized criteria — one index published by Linux Weekly News tracks stocks of companies that sell products and services based on the Linux operating environment.
Some indices, such as the S&P 500, have multiple versions. These versions can differ based on how the index components are weighted and on how dividends are accounted for. For example, there are three versions of the S&P 500 index: price return, which only considers the price of the components, total return, which accounts for dividend reinvestment, net total return, which accounts for dividend reinvestment after the deduction of a withholding tax; as another example, the Wilshire 4500 and Wilshire 5000 indices have five versions each: full capitalization total return, full capitalization price, float-adjusted total return, float-adjusted price, equal weight. The difference between the full capitalization, float-adjusted, equal weight versions is in how index components are weighted. An index may be classified according to the method used to determine its price. In a price-weighted index such as the Dow Jones Industrial Average, NYSE Arca Major Market Index, the NYSE ARCA Tech 100 Index, the price of each component stock is the only consideration when determining the value of the index.
Thus, price movement of a single security will influence the value of the index though the dollar shift is less significant in a highly valued issue, moreover ignoring the relative size of the company as a whole. In contrast, a capitalization-weighted index such as the S&P 500 or Hang Seng Index factors in the size of the company. Thus, a small shift in the price of a large company will influence the value of the index. Traditionally, capitalization- or share-weighted indices all had a full weighting, i.e. all outstanding shares were included. Many of them have changed to a float-adjusted weighting which helps indexing. An equal-weighted index is one. For example, the Barron's 400 Index assigns an equal value of 0.25% to each of the 400 stocks included in the index, which together add up to the 100% whole. A modified capitalization-weighted index is a hybrid between capitalization weighting and equal weighting, it is similar to a capitalization weighting with one main difference: the largest stocks are capped to a percent of the weight of the total stock index and the excess weight will be redistributed amongst the stocks under that cap.
Moreover, in 2005, Standard & Poor's introduced the S&P Pure Growth Style Index and S&P Pure Value Style Index, attribute-weighted. That is, a stock's weight in the index is decided by the score it gets relative to the value attributes that define the criteria of a specific index, the same measure used to select the stocks in the first place. For these two indexes, a score is calculated for every stock, be it their growth score or the value score and accordingly they are weighted for the index. One argument for capitalization weighting is that investors must, in aggregate, hold a capitalization-weighted portfolio anyway; this gives the average return for all investors. Investors use theories such as modern portfolio theory to determine allocations; this considers risk and return and does not consider weights