You may have known the difference between money market and stock exchange. Money market is the body of persons, bankers, financiers, etc. Whose operations decide the rate of interest on borrowed capital. Stock exchange is a place where stocks and shares are bought and sold, such as New York Stock Exchange, the London Stock Exchange and the Jakarta Stock Exchange. So New York, or London, or Jakarta is a financial centre.
Much of the world’s business activity would be impossible without stock and bonds. Stock and bonds are certificate that corporations sell to the public to raise money. To start a new company or to buy a new equipment for an existing company usually requires a very large amount of money. The amoun may be to large to borrow from a bank or from a few private individuals. The company finance should be strong enough to develop productivity. To raise the money, the company sells of thousands sometimes millions of shares of stock or hundred of thausands rupiah’s worth bonds. Stock and bond are also called securities. The people who buy securities are called investors. So they invests money. By careful investment of their capital, each of them will obtain a good income.