Equity Market

Equity market, or stock market, is a system through which company shares are traded. The equity market offers investors an opportunity to participate in a company's success through an increase in its stock price. With enhanced opportunity, however, the equity market usually carries greater risk than debt markets. The U.S. equity market focuses on the New York Stock Exchange, with its large trading floor and system of specialists. The other major component of the U.S. equity market is the NASDAQ, a computerized system of brokers/dealers with no physical trading space. The U.S. equity market also comprises trading on the American Stock Exchange, regional stock exchanges, so-called ECNs, the Over the Counter Bulletin Board, and the Pink Sheets. The worldwide equity market grew rapidly in the late 20th century, rising from $1 trillion in market capitalization in 1974 to $16 trillion in 1997. The worldwide equity market benefited from freer markets, government privatizations, and companies seeking an alternative to debt.