New York Stock Exchange (NYSE)

Definition

The New York Stock Exchange (NYSE) is the largest and one of the oldest stock exchanges in the world. Established under the Buttonwood Agreement in 1792, the NYSE is known for its central role in the global financial markets. The exchange moved to Wall Street in 1793 and became formally known as the New York Stock & Exchange Board in 1817. It received its current name, New York Stock Exchange, in 1983. As the primary U.S. stock exchange, it features major indexes like the Dow Jones Industrial Average (DJIA) and the NYSE Composite Index, offering a broad snapshot of the market.

Examples

Example 1: Apple Inc. (AAPL) Listing:
- Apple Inc. is one of the most valuable companies globally and its shares are traded on the NYSE. Investors buy and sell shares of AAPL on the NYSE, reflecting the company’s stock performance.
Example 2: Initial Public Offering (IPO):
- A company wanting to go public might choose the NYSE for its IPO. For example, Uber Technologies Inc. chose to go public on the NYSE, raising billions in the process.
Example 3: Mergers and Acquisitions:
- The NYSE has been involved in significant mergers and acquisitions. In 2006, the NYSE merged with Euronext NV to create NYSE Euronext, the world’s first global exchange.

Frequently Asked Questions

What is the Buttonwood Agreement?

The Buttonwood Agreement was signed by 24 stockbrokers and merchants in 1792 under a buttonwood tree on Wall Street, establishing the origins of the NYSE.

What are the primary indexes associated with the NYSE?

The main indexes are the Dow Jones Industrial Average (DJIA), which includes 30 large publicly-owned companies based in the United States, and the NYSE Composite Index, which covers all common stocks listed on the NYSE.

How do companies get listed on the NYSE?

Companies must meet stringent listing requirements related to financial standards and corporate governance. They must also pay listing fees and comply with regulatory standards set by the exchange.

What was the significance of the NYSE-Euronext merger?

The merger created the first global exchange, providing a broader platform for international trading and extending the reach of NYSE-listed companies.

Who acquired the NYSE in 2013?

In 2013, the NYSE was acquired by the Intercontinental Exchange (ICE), which extended its reach and diversification in the financial trading sector.

Dow Jones Industrial Average (DJIA): An index that represents 30 significant publicly-owned companies traded on the NYSE and NASDAQ.
Nasdaq Stock Market (NASDAQ): Another major U.S. stock exchange known for its technology listings.
Financial Instruments: Various assets that can be traded, such as stocks, bonds, and derivatives.
Euronext NV: A pan-European exchange that merged with the NYSE in 2006 to form NYSE Euronext.

Online References

Suggested Books for Further Studies

“Reminiscences of a Stock Operator” by Edwin Lefevre: An essential read for understanding stock trading and market speculation.
“Liar’s Poker” by Michael Lewis: Provides insight into the world of bond trading and financial markets.
“The Big Short: Inside the Doomsday Machine” by Michael Lewis: Explores the financial crash of 2008 and the mechanics of the stock and bond markets.
“The Intelligent Investor” by Benjamin Graham: A classic text, providing foundational knowledge on value investing and market behavior.

Accounting Basics: New York Stock Exchange (NYSE) Fundamentals Quiz

### When was the NYSE established? - [ ] 1801 - [x] 1792 - [ ] 1776 - [ ] 1817 > **Explanation:** The New York Stock Exchange was established in 1792 under the Buttonwood Agreement. ### Where was the original location specified by the Buttonwood Agreement? - [ ] Inside a building on Wall Street - [x] Under a buttonwood tree on Wall Street - [ ] On Broadway Street - [ ] In the NYSE building > **Explanation:** The Buttonwood Agreement was signed under a buttonwood tree on Wall Street, which is how it got its name. ### What major index comprises 30 significant publicly-owned U.S. companies? - [ ] S&P 500 - [x] Dow Jones Industrial Average (DJIA) - [ ] NASDAQ Composite - [ ] Russell 2000 > **Explanation:** The Dow Jones Industrial Average (DJIA) includes 30 large and publicly-owned U.S. companies and is a primary indicator of market performance. ### Which event marked the formation of the first global exchange? - [ ] NYSE purchasing Nasdaq - [ ] Founding of the S&P 500 - [x] NYSE merging with Euronext NV in 2006 - [ ] Creation of the NYSE Composite Index > **Explanation:** In 2006, the NYSE merged with Euronext NV, which created the world's first global stock exchange. ### Who acquired the NYSE in 2013? - [ ] Goldman Sachs - [x] Intercontinental Exchange (ICE) - [ ] Morgan Stanley - [ ] JP Morgan > **Explanation:** The NYSE was acquired by the Intercontinental Exchange (ICE) in 2013. ### Which Index represents all common stocks listed on the NYSE? - [ ] S&P 100 - [ ] NASDAQ-100 - [x] NYSE Composite Index - [ ] Russell 1000 > **Explanation:** The NYSE Composite Index includes all of the common stocks listed on the NYSE. ### What type of companies traditionally get listed on the NYSE? - [x] Large, established companies - [ ] Startups with high growth potential - [ ] Only tech companies - [ ] Foreign companies exclusively > **Explanation:** The NYSE traditionally lists large, established companies meeting stringent financial and governance standards. ### What is the main function of a stock exchange like the NYSE? - [ ] To print money - [ ] To issue government policies - [x] To facilitate the buying and selling of shares - [ ] To auction goods and services > **Explanation:** The primary function of the NYSE is to facilitate the buying and selling of shares of publicly owned companies. ### When was the NYSE renamed from the New York Stock & Exchange Board? - [ ] 1850 - [ ] 2000 - [ ] 1920 - [x] 1983 > **Explanation:** The NYSE was officially renamed from the New York Stock & Exchange Board to the New York Stock Exchange in 1983. ### Which economic event is closely monitored by the performance of the NYSE? - [ ] Tax day - [ ] Launch of new IPOs - [x] Market crashes and booms - [ ] Federal Reserve meetings > **Explanation:** The performance of the NYSE is closely monitored during market crashes and booms as it reflects the economic health and investor sentiment.

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