Nasdaq stands for National Association of Securities Dealers Automated Quotations System. It is the world’s second-largest stock exchange by market capitalization and where the majority of technology stocks trade.
It is the second-largest automated electronic stock market in the US.
It is characterized by the existence of high-tech companies in electronics, information technology, telecommunications, biotechnology, and other industries.
This is a stock market index comprised of around 3,000 Nasdaq-listed firms. Their trading system is used in 50 countries.
The Nasdaq Stock Market, abbreviated Nasdaq, is made up of the following indexes:
- Nasdaq Composite Index: a market capitalization-weighted index comprising more than 3,000 local and international companies. Investment, finance and technology companies are featured.
- Nasdaq 100: consists of one hundred of the largest companies listed on this exchange, measured primarily by volume of share sales. Only the top 100 Nasdaq companies are included in this index, which includes hardware and software, telecom, retail/wholesale, and biotech companies.
- Biotechnology Nasdaq:
The Nasdaq Stock Market is mostly made up of pharmaceutical and biotechnology companies. Companies that want to be included in this index must be listed only on the NASDAQ and have a trading volume of at least 100,000 shares.
- Nasdaq Financial Services:
Includes all financial companies excluded from the Nasdaq 100 because they did not meet the index’s strict criteria.
The NASDAQ does not have a trading floor because it is an electronic exchange. The exchange is a dealers’ market, brokers buy and sell equities through a market maker rather than directly from one another. A market maker deals with a specific stock and keeps a set amount of stock on hand. When a broker wants to buy shares, he or she goes straight to the market maker.
The NASDAQ exchange is notable because it was the first to allow investors to trade equities transparently via an automated system. Today, it remains distinctive due to its focus on high-tech companies.
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