All Stock Exchanges Are Not
Created Equal

Although all stock exchanges share some similarities, the various exchanges have different purposes and different modes of operation. Knowing the basics can give you a useful first impression of a company and an idea of its financial position.

BY SHERI WALLACE | A stock exchange is a place where buyers and sellers of securities meet to do business. There are nationwide domestic exchanges, as well as regional exchanges throughout the United States. Stocks are traded by auction or negotiation. A given stock is sold at the highest price buyers are willing to pay (the "bid") - and purchased at the lowest price sellers are willing to accept (the "ask" or "offer"). [Editor's note: please see Anatomy of A Stock Transaction for a detailed explanation of the trading process.] Prices are determined not by the exchange, but by supply and demand. Stocks may be traded in face-to-face transactions at exchanges or through the electronic over-the-counter (OTC) market. The various exchanges list and track daily performance of the stocks they trade. Listings are published by daily newspapers, television news programs, Internet websites, and other outlets.