A stock is a security that enables the issuing company to raise capital from investors on the stock exchange. The investors become partners in the company, and as the company increases its activity and profits, so investors can benefit from its fruits.
In return for the money they pay for the stock, investors receive part of the ownership of the company and thus become partners in it.
With the capital that the company raises, it can purchase equipment, recruit new employees and develop new and existing products, in order to expand its operations. There are companies that distribute dividends - that is, the shareholders participate in their profits by receiving cash, according to the number of stocks they hold.
Ownership of stocks and other securities is currently managed at the TASE Clearing House
through computerized registration only, without the need for physical certificates, as was the practice in the past.
Investors in Stocks
The TASE allows anyone who desires, to purchase stocks of companies or other products on the stock exchange.
- Private investors use various means to purchase stocks, bonds, ETN's and other investing instruments.
- Institutional investors: Entities that manage the funds of clients or a large number of private insurees, such as mutual funds, pension funds, provident funds and insurance companies. Some of the investments are made through the stock market in securities and other products.
Why do companies issue stocks?
Companies that need to finance their activities for growth and development, turn to the stock exchange to raise capital through the issues of stocks and bonds. In this way, the public can purchase securities and thus becomes a partner in the company. In doing so, the stock exchange contributes to the growth of the entire economy.
With the capital raised, the companies finance their investments and business activities such as:
- Expansion into new markets
- Development of new products
- Purchase of new equipment
- Recruitment and more
An index is a numerical figure that represents the average price of securities from a particular market. For example, the TA-35 index
reflects the average price level of the 35 largest stocks on the TASE.
When the index rises, investors in the same group of securities benefit from an increase in the average yield. When the index falls, those investors will see a decline in yield.
The indices are of great interest to investors, and the TASE reports their level and changes in real time.