Finance

Basically trade means exchange of goods, services, or both. Trade is also called commerce. The actual face of trade was barter, which was the direct exchange of goods and services. Today traders generally negotiate through a medium of exchange, like money, which then makes buying separate from selling, or earning. The invention of money has made trade simpler. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

Trade exists for many reasons. It can be due to specialization and division of labor. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions" size helps getting benefits of mass production.

History of Trade:
Trade originated in prehistoric times. It was the main facility of prehistoric people, who bartered goods and services from each other when modern money was never even thought of. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago.

Trade is believed to have taken place throughout much of recorded human history. Materials used for the creation of jewelry were traded with Egypt since 3000 BC. Long-distance trade routes first appeared in the 3rd millennium BC, by the Sumerians in Mesopotamia when they traded with the Harappan civilization of the Indus Valley. Trading is greatly important to the global economy. From the very beginning of Greek civilization to the fall of the Roman Empire in the 5th century, a financially worthwhile trade brought valuable spice to Europe from the Far East, including China.

The fall of the Roman Empire, and the succeeding Dark Ages brought insecurity to Western Europe and a near end of the trade network. However some trade did occur, the Radhanites were a medieval group of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East.

The Sogdians ruled the East-West trade route known as the Silk Road from the end 4th century AD to the 8th century AD.

The Vikings and Varangians also traded from the 8th to the 11th century as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Russia.

Vasco da Gama restarted the European Spice trade in 1498. Earlier to his sailing around Africa, the flow of spice into Europe was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped encourage the Age of Exploration. Spices brought to Europe from distant lands were some of the most valuable commodities for their weight, sometimes rivaling gold.

In the 16th century, Holland was the centre of free trade, imposing no exchange controls, and advocating the free movement of goods.

In 1776, Adam Smith published the paper ?An Inquiry into the Nature and Causes of the Wealth of Nations?. This paper criticized Mercantilism, and argued that economic specialization could benefit nations just as much as firms. Since that time the division of labor was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labor more efficiently and thereby become more productive.

The Great Depression was a major economic collapse that ran from 1929 to the late 1930s. There was a great setback in trade and other economic indicators during this period.

The lack of free trade was considered by many as a root cause of the depression. Only during the World War II the recession ended in United States.

History of Money:

The first instances of money were objects with fundamental value are called commodity money and includes any commonly-available commodity that has intrinsic value; historical examples include rare seashells, whale"s teeth, and cattle. In medieval Iraq, bread was used as an early form of money.

Roman denarius Currency was introduced as a standardized money to facilitate a wider exchange of goods and services. This first stage of currency metals were used to represent stored value.

As the system of commodity money evolved in many instances it then became representative money.

Current Trends:

Doha round
The Doha round of World Trade Organization negotiations aims to lower barriers to trade around the world, focusing on making trade fairer for developing countries. Talks have been hung over a divide between the rich, developed countries, and the major developing countries. Agricultural subsidies are the most significant issue upon which agreement has been hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building.

The Doha round began in Doha, Qatar, and negotiations has subsequently continued in: Cancún, Mexico; Geneva, Switzerland; and Paris, France and Hong Kong.

International organizations
European Common Market
GATT = General Agreement on Tariffs and Trade
G8
IMF = International Monetary Fund
OPEC = Organization of the Petroleum Exporting Countries

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Stock exchange or bourse is a mutual organization which provides facilities for stock brokers and traders, in trading company stocks and other securities, and for the issue of redemption of securities and other financial tools and capital events like the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts and other pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less linked to such a physical place. Electronic networks run modern markets are, providing them great speed and cost of transactions. Stock exchange is often called the most important element of a stock market. The Demand and Supply in the stock markets is attracted by number of factors that affect the price of stocks.

History of stock exchanges:
In 12th century France, the courratiers de change were concerned with managing the debts of agricultural communities on behalf of the banks and these men also traded in debts. These men were the first brokers.

In the middle of the 13th century, Venetian bankers traded in government securities. In 1351, the Venetian Government outlawed spreading rumors about lowering the price of government funds. Because of this rumor people in Pisa, Verona, Genoa and Florence also started trading in government securities which was possible because there were independent city states ruled by a council of powerful citizens during the 14th century.

Raising capital for businesses:
The Stock Exchange helps current and newly-formed companies raise capital for building and expanding their business through selling shares to the investing public.

Mobilizing savings for investment:
When people draw their savings and invest in shares, it leads to a more balanced allotment of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized to promote business activity that benefits several economic sectors like agriculture, commerce and industry, resulting in a stronger economic growth.

Creating investment opportunities for small investors:
The Stock Exchange provides opportunity for small investors like the big investors to own shares of the same or different companies.

Government capital-raising for development projects:
Governments at various levels may decide to borrow money for financing infrastructure projects like sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds are raised through the Stock Exchange where public buy them, thus loaning money to the government. The issuance of such municipal bonds can prevent the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

Listing requirements:
Listing requirements are the set of conditions forced by any given stock exchange upon companies that want to be listed on that exchange.

Requirements by stock exchange:
For companies to have their stock and shares listed at the stock exchange have to meet certain requirements of the exchange. But requirements vary in different exchanges.

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Anything becomes valuable if someone has great need for it. This same theme is applied in stock exchange where exchange of stocks takes place. The most basic meaning of a share is ownership, or equity, in a company. Common people or companies buy shares, which represent a portion of a company"s assets and earnings.

As a shareholder, the extent of an ownership in a company depends on the number of shares you purchased to the total number of shares available and the type of shares the shareholder owns.

There are two common types of shares; Ordinary Shares and Preference Shares. Preference shareholders have "preference" over ordinary shareholders in relation to the payment of dividends and/or in the event of liquidation. Owners of both ordinary and preference shares has voting rights. For example, if you buy 1000 shares in a company that has issued a total of 100,000 shares, you own one percent of that company.

Wall Street is a narrow street in lower Manhattan in New York City, which thought of being the historical heart of the Financial District; it was the first permanent home of the New York Stock Exchange.

The phrase "Wall Street" in short refers to all big business in the United States based whether in New York or some other place.

People from all kinds of business from all over the world invest in purchasing shares of different big companies and franchises. Ordinary people do not buy shares themselves because of lack of stock bargain skills, for this, stock brokers are hired to purchase shares and these brokers also advise on stock status in the market.

The National Stock Exchange of India Limited has a Powerful Study Group on Establishment of New Stock Exchanges, and it was promoted by leading Financial Institutions at the greatest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

topnasaqstocks.com is a pure stock exchange forum and other topics related to business are discussed here.

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