Chitresh Panchal

Stock exchange is a body which act as a mediator and facilitates buying and selling of shares for execution of their respective orders. Some of the well known exchanges are BSE, NSE, NYSE, NASDAQ etc. For trading any stocks on exchange the company must first get listed on that exchange

Shares are the smallest unit of ownership in any enterprise that provides proportional distribution of any profit (if declared) in the form of Dividend.  The two main types of shares are common shares and preferred shares. Preferred shareholders have a bigger claim on company's earnings and assets. Also, they get preference over common shareholders when dividends are distributed. Generally, dividend for preference shareholders is more than that for the common shareholders. Earlier, shares were issued in physical format. However, now physical paper stock certificates have been replaced with electronic recording of stock shares, just as mutual fund shares are recorded electronically.

Companies issue shares to meet their financial requirements for expansion of business and other purposes. By issuing the shares company gets funds from public and other financial institutions. In return of investment, shareholder gets ownership of the company in the form of share

People buy shares because they are looking for better returns on their investments as compared to traditional products like bank FDs, PPF etc. They believe in growth prospect of a company in which they invest.