The Interest Rate and The Stock Price Indices for Investment

Abstract

Investors can invest in the stock exchange, which is a place for buying and selling securities. which has brokers who buy and sell securities to investors. The stock exchange is including, primary market and secondary market. The primary market is the place that the person who want to raise funds sell securities for the first time directly to investors. The secondary market is a market where financial assets that were previously traded in the primary market are traded. This will help increase liquidity for investors in the primary market. Securities or stock sold on the stock exchange are divided into two types: common stocks, which will allow investors to participate as business owners and have the right to vote at shareholder meetings. Another type is preferred stock, which allows investors to participate as owners of the business same as the common stocks. But will not have the right to vote at the shareholder meeting. The Stock Exchange of Thailand will show the movement of the prices of common stocks traded on the Stock Exchange of Thailand. The stock price index will be displayed on a daily basis. This is called the stock price index. If the interest rate from investing in cash falls, investors will instead choose to invest in securities for speculative purposes and will not hold on cash. This will cause the price of securities to increase. Therefore, interest rates and security prices are related in negative. When the central bank cuts interest rates, it causes the prices of securities in the market to increase.