Economics Essay on the Australian Sharemarket and How it Works

The Share Market The share market in Australia has two main functions. Firstly, it provides a link so that listed companies can receive equity funds to expand their operations and so that the people with the funds can invest and receive return in capital gains and dividends income. Secondly, it provide a market place where buyers and sellers can come together for the trading of shares and other securities at the current market price which …

…value of the shares. This idea of being run by speculation causes long term troubles. When this cycle finally runs out, the share prices will be forced to fall into a stock market crash. When this 'stock market crash' occurs, shares lose their desirability as an investment opportunity to investors as they are slow to recover their value. This results in the prices of other resources rising as investors move their funds into other assets.