The stock market provides a way for companies to issue stock to the investing public. Issuing stock is the important factor of capital formation for a company.
Liquidity results in narrow bid-ask spreads, which means small differences between what buyers are offering and what sellers are asking for stocks.
Trading maintains transparency in financial transactions. Efficiency, growth, freedom and variety are all possible in the security market because of transparency. All securities traded on the market were known to the all the participants through transparency.
The stock market provides a degree of protection to investors through oversight by the SEC, FINRA and other legal regulatory and self-regulating bodies on state and professional levels that serve to create an organized and liquid group of stock exchanges and stock trading platforms.
Stock market serves as a way for investors who seek large returns on their investments to access organized, liquid, regulated and transparent risk investing.
Characteristics of Security markets