• Primary Scheme of the fluctuations of stock exchange prices.

We are told that the stock exchanged has fallen…but how can we know it? It is the CAC 40, among others, it is a reference index. When people say the stock exchange is rising or decreasing, they usually refer to its main index.
Reference index enable to evaluate the state of a market. Several index exist like the NIKKEI for the Japanese Stock Exchange, the DOW JONES for the New York Stock Exchange, the CAC40 for the Paris Bourse, it gathers the best listed 40 firms and the the most representatives of the different branches of activities in France.

It is important to know who act in Stock Exchange, its actors can be classified into two categories:
- the buyers
- the sellers

The two main buyers are the State or firms (public or private …)… These buyers are asking for funds to be able to finance the economic policy of the State, or to finance the development of firms. Les deux principaux demandeurs sont l’État ou les entreprises (publiques ou privées)…

Concerning the funds offer, it is determined by the investors of different origins:
- firms
- individuals
- or financing.

Those investors exchange their financing resources for issued stocks on the stock market.
Moreover, the Stock Exchange for savers is the place where securities possessed can be sold in order to get back their stake, hoping to get a capital-gain, or to invest their liquidities by buying stocks.

What does it vary?

Let’s take the example of firms, sellers help them get financing. They mostly exchange this money for a part of the firm, it is also called “action”, and therefore the seller becomes a shareholder of the firm. The State, however, does not issue shares, but « treasury stocks ». So, stock exchange is a market where sellers and buyers of funds meet through a central computer. The exchanges concern property stocks (Shares) or/and claim stocks (Bonds).

That is how the Stock Exchange does it:

Let’s imagine that the firm is doing well, so the inventors « the sellers » give more value to this share. They can then decide to resell these shares at a higher price, at this time the market price increases.
Inversely, if the firm is doing less well, so the investors give less value to this share, so the market price decreases.

Finally, other factors exist for the fluctuation:
- The economic trend
- The evolution of the Dollar or the Euro
- Or even the psychology of the investors can change the perception of the value of this share.