The stock market also known as the equity market is a marketplace where publicly traded companies' stocks are bought and sold. It allows companies to raise capital by offering investors a stake in the company in exchange for money. Investors can further buy/sell stocks among themselves as well, potentially making a profit or a loss on their investments. It is an important part of the global financial system and can be a good way for individuals and companies to earn money and manage financial risk.

There are several basic principles that underlie the functioning of the stock market:

1. Companies issue stocks to raise capital: When a company wants to raise money, it can do so by issuing stocks and selling them to investors. The money that investors pay for the stocks becomes capital for the company, which it can use to fund operations and growth.
2. Stocks defines ownership in a particular company: When you buy a stock, you are buying a small ownership stake in the company. As an owner, you are entitled to a share of the company's profits, and have say in how company runs (though the extent of your influence will depend on the number of shares you own).
3. Stock prices are further determined by supply and demand ratio: The price of a stock is determined by how much an investor or group of investor are willing to pay for it. If investors or retail traders are willing to buy a particular stock than selling it, the price will go up, and if investors want to sell a particular stock than buying, the price tends to go down.
4. The stock market is a way to raise capital and manage risk: For companies, going public (issuing stocks and listing them on the stock market) can be a good way to raise money and grow the business. For investors, buying stocks can be a way to make money if the stock price goes up, but there is also a risk of losing money if the stock price goes down.
5. The stock market can be volatile: The stock market can fluctuate significantly in the short term, due to a various factors such as economic conditions, company news, and investor sentiment. Over the long term, however, the stock market has historically trended upwards, making it a potentially good investment for those with a long-term horizon.

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