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Stock is a share certificate issued by a joint stock limited company to investors when raising capital, which represents the ownership of the joint stock company by its holders (that is, shareholders).

Stock is the right to claim the company's income and assets.

This kind of ownership is a comprehensive right, for example, ordinary shareholders can attend shareholders' meetings, vote, participate in major decisions of the company, receive dividends or share dividends. Every stock in the same category represents the equal ownership of the company. The share of ownership of the company owned by each shareholder depends on the proportion of shares held by each shareholder to the total share capital of the company. Generally, stocks can be traded and transferred with compensation, and shareholders can recover their investment through stock transfer, but they cannot ask the company to return their investment. However, the company can buy back its own issued shares through the stock market, raise the stock price to protect the rights of shareholders and concentrate the rights and interests of each share. The purpose of this practice is to protect the rights of small and medium circulation shareholders. The relationship between shareholders and the company is the relationship between ownership and ownership, which is different from the relationship between creditor's rights and debts. Therefore, the shareholder's claim to the company is the residual claim, and only when the creditor fully recovers the creditor's rights can the remaining assets be claimed. Shareholders are the owners of the company, and they shall bear limited responsibilities, risks and profits to the extent of their capital contribution. (Of course, some shareholders of high-speed technology enterprises may obtain shareholder status based on their technology. Enterprises can raise funds by issuing shares to the public, or enrich their assets by private placement. At present, most of the companies listed on Shanghai Stock Exchange and Shenzhen Stock Exchange are state-owned holding companies, but a considerable number of them are private joint-stock companies.

Stock nature

The income that shareholders get from the joint-stock company that owns the shares is dividends. The distribution of dividends depends on the company's dividend policy. If the company does not distribute dividends, shareholders are not entitled to receive them. Preferred shareholders can get a fixed amount of dividends, while the dividends of ordinary shareholders are related to the company's profits. Dividends of ordinary shareholders are distributed after dividends of preferred shareholders, and ordinary shareholders have the right to distribute dividends only after all preferred shareholders get their promised dividends in full. Stock is only the ownership certificate of the actual capital owned by the joint-stock company, and it is the certificate to participate in the company's decision-making and claim dividends. It is not real capital, but indirectly reflects the situation of real capital movement, thus showing itself as a kind of virtual capital.

The origin of stocks

Stock has a history of nearly 400 years, and it appeared with the emergence of joint-stock companies. With the expansion of business scale and insufficient capital demand, the company needs a way to obtain a large amount of funds. As a result, enterprise organizations appeared in the form of joint-stock companies, and shareholders jointly invested and operated. The change and development of joint-stock companies have produced financing activities in the form of stocks; The development of stock financing has produced the demand for stock trading; The demand for stock trading has promoted the formation and development of the stock market; The development of the stock market finally promoted the perfection and development of stock financing activities and joint-stock companies. Stocks first appeared in capitalist countries. The earliest joint-stock limited company system in the world was born in 1602, the East India Company established in the Netherlands. After the emergence of joint-stock companies, they have been widely adopted by capitalist countries and become one of the important forms of enterprise organization in capitalist countries. With the birth and development of joint-stock companies, the way of raising funds in the form of shares has also developed, and the demand for share trading and transfer has emerged. In this way, it promotes the emergence and formation of the stock market and promotes the perfection and development of the stock market. 16 1 1 The shareholders of the East India Company traded in the Amsterdam Stock Exchange, and later a special broker arranged the transaction. Amsterdam Stock Exchange formed the first stock market in the world. At present, the company limited by shares has become one of the most basic forms of enterprise organization; Stock has become an important channel and way for large enterprises to raise funds, and it is also the basic choice for investors to invest; The stock market (including the issuance and trading of stocks) and the bond market have become the important basic contents of the securities market.

The role of stocks

(1) Stock is the proof of capital contribution. When a natural person or legal person invests in a joint stock limited company, it may obtain shares as proof of capital contribution;

(2) Shareholders shall, by virtue of their shares, prove their shareholder status, attend the shareholders' meeting of the joint-stock company and express their opinions on the operation of the joint-stock company;

(3) Shareholders participate in the profit distribution of share-issuing enterprises by virtue of their shares, which is commonly referred to as dividends, so as to gain certain influence on the economic stock market.

(II) The influence of the stock market Joint-stock companies, stocks and stock markets have undoubtedly played a positive role in the economic development of enterprises in capitalist countries. Stock companies, stocks and stock markets are not unique to capitalism. China is a socialist country. Under the condition of developing planned commodity economy, we can also use the enterprise organization form of joint-stock company, the way of stock financing and the adjustment mechanism of stock market to serve the development of planned socialist commodity economy. Its positive use is: 1, which plays a role in the development of national economy.

(1) It can widely mobilize, accumulate and concentrate idle social funds, serve the national economic construction and development, expand the scale of production and construction, promote economic development, and receive the effect of "using domestic capital instead of domestic debt".

(2) We can give full play to the market mechanism, break the compartmentalization and regional blockade, promote the horizontal financing of funds and the horizontal connection of economy, and improve the overall efficiency of resource allocation.

(3) We can explore a new way to reform and improve the organizational forms of Chinese enterprises, which is conducive to constantly improving the organizational forms of enterprises owned by the whole people, collective enterprises, individual enterprises, foreign-funded enterprises and joint-stock enterprises, giving full play to the position and role of the joint-stock economy in China's national economy and promoting China's economic development.

(4) it can promote the deepening development of China's economic system reform, especially the deepening development of the shareholding system reform, which is conducive to rationalizing the property rights relationship and enabling the government and enterprises to perform their duties, use their rights and benefit from each other.

(5) It can expand the channels and ways of using foreign capital in China, enhance the ability of absorbing foreign capital, help to use foreign capital more and improve the economic benefits of using foreign capital, and receive the effect of "using foreign capital without raising foreign debts".

Stock classification

Rights issue is the behavior of listed companies to further issue new shares and raise funds to the original shareholders according to the needs of the company's development and relevant regulations and procedures. Traditionally, when a company issues shares, the subscription right of new shares is distributed among the original shareholders according to the proportion of the original shares, that is, the original shareholders have the preemptive right. Share transfer is a unique product of China stock market. The holders of state-owned shares and legal person shares give up the rights issue and transfer the rights issue to other legal persons or the public with compensation. The new shares subscribed by these legal persons or the public when exercising the corresponding rights issue are called rights issue. At present, the rights issue is not listed and circulated. Although share transfer can solve the problem that state shareholders and corporate shareholders cannot issue shares. However, the proportion of state shares and legal person shares in the total share capital is gradually decreasing, and in the long run, they will lose their controlling rights. Meanwhile. The transfer of rights has produced social public shares that cannot be circulated at present, which has affected the enthusiasm of investors to subscribe and brought about confusion in the ownership structure. In order to overcome the limitations of rights issue, more and more state-owned shareholders and legal person shareholders of listed companies have joined the rights issue or converted their assets into cash. Greatly improve the strength of the factory company, not only to ensure that the equity is not diluted. It also encouraged the public's confidence in the investment of Busch. According to statistics, by the end of 1997, the total number of tradable shares in Shanghai stock market was16.89 million shares, accounting for 1.59% of the total share capital.

1, according to the listing area, it can be divided into: the shares of listed companies in China are divided into A shares, B shares, H shares, N shares and S shares.

A shares

The official name of A shares is RMB common stock. Common shares issued by domestic companies for domestic institutions, organizations or individuals (excluding investors from Taiwan, Hong Kong and Macao) to subscribe and trade in RMB. A shares mainly have the following characteristics: (1) domestic ordinary shares are issued, and only domestic investors can subscribe in RMB; (2) The shares that account for the largest proportion of the company's outstanding shares are also fully circulated, but most companies' A shares are not the most issued by the company, because at present, most listed companies in China have non-circulating state shares or state-owned legal person shares in addition to issuing A shares. (3) The stocks that are considered to focus only on the profit distribution right and not on the management right are mainly because people who participate in A-share trading in the stock market are more concerned about the price difference between A-share trading and other rights it represents.

B shares

B shares are also called RMB special stocks. Refers to the special stock registered in Chinese mainland and listed in Chinese mainland. Indicate the face value in RMB, and can only subscribe and trade in foreign currency.

H shares

H shares, also known as state-owned shares, refer to the shares of state-owned enterprises listed in Hong Kong.

S shares

S shares refer to the shares of enterprises whose core business is mainly produced or operated in Chinese mainland, registered in Singapore or other countries and regions, but listed on the Singapore Stock Exchange.

N shares

N shares refer to foreign shares registered in Chinese mainland and listed in new york.

2. According to the classification of shareholders' rights represented by stocks:

Common stock refers to the shares that enjoy common rights in the company's operation and management, profit and property distribution, and represents the right to claim the profits and remaining property of the enterprise after meeting the requirements of full repayment of creditor's rights and the income and creditor's rights of priority shareholders. Common stock constitutes the foundation of a company's capital and is a basic form of stock. At present, all the stocks traded in Shanghai and Shenzhen Stock Exchanges are common stocks. Ordinary shareholders enjoy the following basic rights in proportion to their shares: (1) The right to participate in the company's decision-making. Ordinary shareholders have the right to attend shareholders' meetings, to propose, vote and vote, or to entrust others to exercise shareholders' rights on their behalf. (2) Profit distribution right. Ordinary shareholders have the right to receive dividends from the company's profit distribution. The dividend of common stock is not fixed, which is determined by the profitability of the company and its distribution policy. Ordinary shareholders must receive fixed dividends from preferred shareholders in order to enjoy dividend distribution rights. (3) stock options. If the company needs to expand and issue more common shares, the existing common shareholders have the right to buy a certain number of newly issued shares at a certain price lower than the market price according to their shareholding ratio, so as to maintain their original enterprise ownership ratio. (4) the right to distribute the remaining assets. When the company goes bankrupt or liquidates, if there is any surplus company assets after paying off debts, the rest will be distributed in the order of preferred shareholders first and common shareholders later. Preferred stock relative to common stock. Preferred shares have priority over common shares in the right to distribute profits and surplus property. Preferred shareholders have two rights: (1) priority distribution right. When the company distributes profits, shareholders holding preferred shares have priority over shareholders holding common shares, but enjoy a fixed amount of dividends, that is, the dividends of preferred shares are relatively fixed. (Example: A company cannot distribute dividends to ordinary shareholders unless it distributes dividends to preferred shareholders. Because preferred shareholders have the right to distribute dividends prior to ordinary shareholders. (2) Priority creditor's rights. If the company is liquidated, the remaining property is distributed, and the preferred stock is distributed before the common stock. Note: When the company decides not to distribute dividends for several consecutive years, the preferred shareholders can enter the shareholders' meeting to express their opinions and safeguard their rights. After rights issue, rights issue is a stock that is at a disadvantage relative to common stock when distributing interest or interest dividends and residual property. Generally, after the distribution of common shares, the residual interests are redistributed. If the company's profits are huge and the number of shares issued after the rights issue is limited, the shareholders who buy the rights issue can get high returns. After the rights issue, the raised funds generally can't generate immediate income, the range of investors is limited and the utilization rate is not high. Post-allotment is generally issued under the following circumstances: (1) When the company issues new shares to raise funds for equipment expansion, in order not to reduce dividends to the old shares, the new shares are issued as post-allotment before the new equipment is officially put into use; (2) When the enterprise is merged, in order to adjust the merger ratio, a part of the shares should be paid to the shareholders of the merged enterprise, and then a rights issue should be made; (3) In companies with government investment, the shares held by the government are regarded as post-distribution before the dividends of the privately held shares reach a certain level. Junk stocks are stocks of companies that operate at a loss or violate regulations. Blue-chip companies operate well, with good performance and earnings per share above 0.5 yuan. In the blue-chip market, the shares of large companies with important dominant position, excellent performance, active trading and rich dividends are called blue-chip stocks.

3, can be divided into

(1) Registered shares and bearer shares. This mainly depends on whether the name of the shareholder is recorded in the stock. Registered shares are the names of shareholders recorded on the shares. Where shares are transferred, the company must go through the transfer procedures. Bearer stock means that the name of the shareholder is not recorded on the stock. If it is a transfer, it will take effect through delivery. ② There are par value stocks and no par value stocks. This is mainly based on whether the stock records the amount per share. A par value stock is the amount per share recorded on the stock. No par value stock only records the total capital of the stock and the company, or the proportion of each share to the total capital of the company. ③ Single stock and multiple stocks. This is mainly divided according to the number of shares expressed in the stock. A stock means that each stock represents one share. Plural stock refers to how many stocks each stock represents. (4) Common stock and special stock. This is mainly divided according to the size of the rights represented by stocks. Dividends of common stock increase or decrease with the increase of company profits. Special stocks generally receive fixed dividends in priority according to the prescribed interest rate, but their shareholders have limited voting rights. Special stocks are also called preferred stocks. (5) Voting stocks and non-voting stocks. This mainly depends on whether shareholders have the right to vote. Ordinary shareholders have the right to vote, while preferred shareholders who enjoy special interests in some aspects are often restricted in their voting rights. Shareholders without voting rights cannot participate in the company's decision-making.

4. According to the activity of stock trading, China investors divide stocks into first-line, second-line and third-line stocks:

unistrand

Refers to a class of stocks that are actively traded in the secondary market. The companies that own these stocks have excellent performance and good development prospects. First-line companies are in the leading position in the industry and their products are irreplaceable.

Secondary stock

Second-tier stocks are also active in the secondary market. Companies with such stocks have good performance and good development prospects. The second-tier companies are at a medium level compared with the first-tier companies on the chip. The product is slightly inferior to the first-line company.

Inventory base

1, quotation unit

The minimum change unit of the declared price of A shares is 0.0 1 RMB. For example, if you want to apply for development, the price of the form is 10.02 yuan, but you can't fill in 10.002 yuan. The minimum change unit of the declared price of B shares is 0.00 1 USD (Shanghai Stock Exchange).

2. Price limit

The daily highest market price rises (or falls) to 10% of the previous day's closing price.

ST shares, up and down 5%

IPO Listing and Price Limit Committee

On the day of IPO, the upper limit of price increase is the issue price ×( 1+ 1000%) and the lower limit is the issue price ×( 1-50%). But the next day, you will follow the rules of price limit.

3, the price limit of IPO

Some rules should be observed when entrusting pricing on the day of listing of new shares. For example, according to the regulations of Shenzhen Stock Exchange, the call auction range of the first day of listing of new shares is 150 yuan, and the effective bidding range of continuous bidding is 15 yuan. The effective bidding range of continuous bidding for the first day of listing in Shanghai Stock Exchange is 10% of the share price at that time.

4, one hand

One hand is 100 shares. In principle, stocks should be bought and sold in multiples of one hand. However, due to the shortage of "one hand" rights issue, for example, 10 gives 3 shares, and if you have 100 shares, it becomes 130 shares. At this time, 130 shares can be sold. In other words, zero shares are not enough to sell in one hand.

5. The current hand is the number of hands tied at that time.

6，T+ 1

T is the first letter of English Trade. At present, the Shanghai and Shenzhen Stock Exchanges stipulate that the stocks bought on the same day can only be sold the next day. After the stocks sold on the same day are confirmed to be closed, the returned funds can buy stocks on the same day.

7. call auction (how to generate the opening price)

Before trading starts every day, that is, from 9: 00 to 9: 25, the Shanghai and Shenzhen Stock Exchanges begin to accept effective trading instructions from investors. At the moment of the official opening at 9: 30, the computer mainframe of the Shanghai and Shenzhen stock exchanges began to match transactions, and the opening price of each stock was determined by the maximum transaction price of each stock. There is no call auction at the opening in the afternoon. Call auction is not applicable: subscription of new shares, allotment of shares and bonds.

8. Continuous bidding

Call auction mainly produces the opening price, and then the stock market has to go through a continuous buying and selling stage, so there is a continuous bidding. Orders that have not been closed in call auction will continue to be valid, and will automatically enter the continuous bidding, waiting for the right price to be closed. At this time, investors from all over the country are still continuously inputting various effective trading instructions to the computer mainframe of the Shanghai and Shenzhen Stock Exchanges, and the computer mainframe of the Shanghai and Shenzhen Stock Exchanges is also continuously bidding for various effective trading instructions from investors from all over the country.

9. Fill in the allocation form

Whether to write "buy" or "sell". Some people say that I bought a rights issue with money, of course I filled in "buy". This is the right to issue shares in Shenzhen. Fill in "Purchase". However, to issue shares in Shanghai stock market, you must fill in "sell". This "selling" is not a "selling" rights issue, but a "selling" rights issue.

10, the provisions for issuing new shares are:

When a listed company applies for issuing new shares, it shall not only comply with the provisions of the Measures for the Administration of the Issuance of New Shares by Listed Companies, but also meet the conditions that the average weighted average return on equity in the last three fiscal years is not less than 65,438+00%, and the average weighted average return on equity in the last 65,438+0 fiscal years is not less than 65,438+00%.

Stock index Stock price index is a reference index compiled by stock exchanges or financial services institutions to show changes in the stock market. Due to the volatility of stock prices, investors are bound to face market price risks. It is easy for investors to know the price changes of a specific stock, but it is neither easy nor annoying to know the price changes of various stocks one by one. In order to adapt to this situation and need, some financial service institutions make use of their professional knowledge and the advantages of being familiar with the market to compile stock price indexes and publish them publicly as indicators of market price changes. Based on this, investors can test the effect of their investment and predict the trend of the stock market. At the same time, the press, company bosses and even political leaders also use this as a reference index to observe and predict the social, political and economic development situation. When calculating the average or index of stock price, the following four points are often considered: (1) sample stocks must be typical and common. Therefore, when selecting sample stocks, factors such as industry distribution, market influence, stock grade and appropriate quantity should be comprehensively considered. (2) The calculation method should have high adaptability, and can make corresponding adjustments or corrections to the rapidly changing stock market, so that the stock index or average value has good sensitivity. (3) There should be scientific calculation basis and means. The calculation basis must be unified, generally based on the closing price, but with the increase of calculation frequency, some are calculated at the hourly price or even shorter time. (4) The base period should be well balanced and representative. The stock price index is compiled by using the index method in statistics, which reflects the overall price of the stock market or the change and trend of a stock price. According to the range of stock price index reflecting price trend, stock price index can be divided into comprehensive index reflecting the whole market trend and classified index reflecting the price trend of a certain industry or a certain type of stock. For example, the Shenzhen Composite Index reflects the overall trend of the Shenzhen Stock Exchange, the Shenzhen B-share Index reflects the price trend of the B-shares listed on the Shenzhen Stock Exchange, and the Shenzhen Industry Classification Index reflects the price trend of the classified industries in the Shenzhen Stock Exchange. Composite index/component index According to the number of stock samples included in the index calculation range when compiling the stock index, the stock index can be divided into all listed stock price indexes (i.e. composite index) and component indexes. Comprehensive index means that all the stocks involved in the price trend reflected by the index are included in the calculation range of the index. For example, the Shenzhen Composite Index released by Shenzhen Stock Exchange includes the price changes of all listed stocks, while the index of agriculture, forestry, animal husbandry and fishery, extractive industry index, manufacturing index and information technology index in the industry classification index of Shenzhen Stock Exchange includes all listed stocks within the calculation range of their respective indexes. The constituent stock index refers to selecting some representative stocks from all the stocks covered by the index as index samples, which are called constituent stocks of the index. Only the selected constituent stocks are included in the index calculation. For example, the constituent stock index of Shenzhen Stock Exchange is a comprehensive constituent stock index calculated by selecting 40 listed stocks of Shenzhen Stock Exchange. Through this index, the price trend of all listed stocks can be roughly reflected. Shanghai SSE 30 Index is the constituent stock index of Shanghai Stock Exchange. Calculation method There are two methods to calculate the stock price index: arithmetic average method and weighted average method. 1. Arithmetic average method is to simply average the price of each stock that constitutes the index and calculate an average value. For example, if the calculated stock index includes three stocks whose prices are 15 yuan, 20 yuan and 30 yuan, the arithmetic average of their stock prices is (152030)/3 = 2 1.66 yuan. 2. The weighted average method is to calculate the average stock price, not only considering the price of each stock, but also adjusting the average according to the size of each stock's influence on the market. In practice, the number of issued shares or circulation is generally taken as a reference factor of market influence and included in the index calculation, which is called weight. For example, the number of three stocks issued is1000,000,000,000,000 and 300,000,000 respectively, and the weighted average price is (15× l 20× 2 30× 3)/(l 23) = 2416 yuan. Because it is inconvenient for people to calculate and use the actual average price of stocks as an index, it is rare to directly express the index level with the average price. Instead, based on the average price of a certain benchmark date, the average price of subsequent periods is compared with the average price of the benchmark date to calculate the ratio of each period, and then it is converted into percentage or thousandth point as the value of the stock index. For example, the benchmark index of composite index issued by Shanghai Stock Exchange and Shenzhen Stock Exchange is 100, while the benchmark index of component index issued by both of them is 1000. In practice, listed companies often have capital increase, share split, dividends and other behaviors, which make the stock price have ex-dividend effect and lose continuity, so it is impossible to make direct comparison. Therefore, the changes of these factors should also be considered when calculating the stock index, and the index should be revised in time to avoid the distortion of the stock index.

Stock listing refers to the legal act of publicly listing and trading the issued shares on the stock exchange after being approved by the stock exchange. Stock listing is a "bridge" connecting stock issuance and stock trading. In China, shares are eligible for listing after public offering. After listing, the company will be able to get huge capital investment, which is conducive to the company's development. The new stock listing rules mainly modify the information disclosure and suspension system, and enhance the transparency of information disclosure, which is an improvement, especially in the case that major issues need to be disclosed in detail and continuously, which is conducive to ordinary investors to resolve the impact of some information asymmetry.

Basic characteristics of stocks

Ability to repay without compensation.

Stock is a kind of negotiable securities with free repayment period. After investors subscribe for shares, they can no longer ask for withdrawal, but can only sell them to third parties in the secondary market. Share transfer only means the change of the company's shareholders, and does not reduce the company's capital. As far as the term is concerned, as long as the company exists, the stock it issues exists, and the term of the stock is equal to the duration of the company.

(2) participation.

Shareholders have the right to attend the shareholders' meeting, elect the board of directors of the company and participate in major decisions of the company. Shareholders' willingness to invest and economic benefits are usually realized by exercising shareholders' right to participate. The right of shareholders to participate in the company's decision-making depends on the number of shares they hold. In practice, as long as the number of shares held by shareholders reaches the actual majority needed to influence the decision-making results, the company can grasp the decision-making control power.

(3) profitability.

Shareholders have the right to receive dividends or bonuses from the company by virtue of the shares they hold, and to obtain investment income. Dividends or bonuses mainly depend on the company's profit level and the company's profit distribution policy. The profitability of stocks is also manifested in the fact that stock investors can obtain the price difference or realize the preservation and appreciation of assets. By buying people at a low price and selling stocks at a high price, investors can profit from the difference. Take the stock of Coca-Cola Company in the United States as an example. If you invest 1000 at the end of 1983 to buy the company's shares, you can sell them at the market price of 1 1 554 before July of 1994, and earn more than 10 times the profit. During the period of inflation, the stock price will rise with the replacement price of the company's original assets, thus avoiding the depreciation of assets. In the period of high inflation, stocks are usually regarded as the first choice for investment.

(4) liquidity.

The liquidity of stock refers to the tradeability of stock among different investors. Liquidity is usually measured by the number of shares that can be circulated, the trading volume of shares and the sensitivity of stock prices to trading volume. The more tradable shares, the greater the trading volume, the less sensitive the price is to the trading volume (the price will not change with the trading volume), and the better the liquidity of the stock, and vice versa. The circulation of stocks enables investors to sell stocks in the market and get cash. Through the circulation of stocks and the changes of stock prices, we can see people's judgments on the development prospects and profit potential of related industries and listed companies. Those industries and companies that attract a large number of investors in the circulation market and keep their share prices rising can continuously absorb a large amount of capital into production and business activities by issuing additional shares, thus achieving the effect of optimizing resource allocation. (5) Price fluctuation and risk. As the trading object in the trading market, stocks, like commodities, have their own market quotations and prices. Because the stock price is influenced by many factors, such as the company's operating conditions, the relationship between supply and demand, bank interest rates, public psychology and so on, its fluctuation has great uncertainty. It is this uncertainty that may make stock investors suffer losses. The greater the uncertainty of price fluctuation, the greater the investment risk. Therefore, stock is a high-risk financial product. For example, the share price of International Business Machines Corporation (ibm), which dominates the world computer industry, was as high as $ 170 when its performance was extraordinary, but when its position was challenged and its business blunder caused losses, its share price fell to $40. If you buy stocks at a high price at an inappropriate time, it will lead to serious losses.

Price limit

The price limit system originated from the early foreign securities market. In order to prevent the price from soaring and plunging, curb excessive speculation and appropriately limit the price fluctuation of each stock on the same day, it is a trading system in the securities market. That is to say, the maximum fluctuation range of the trading price in a trading day is a few percent above and below the closing price of the previous trading day, and trading will stop after it exceeds. The current price limit system of China's securities market was promulgated on February 2003 1996 13, and implemented on February 26, 2006, aiming at protecting investors' interests, maintaining market stability and further promoting market norms. According to the system, except for the first day of listing, the trading price of stocks (including A and B shares) and fund securities in one trading day shall not exceed 10% compared with the closing price of the previous trading day, and the entrustment exceeding the price limit shall be invalid. The main difference between China's price limit system and foreign systems is that after the stock price reaches the price limit, it does not completely stop trading, and the trading within the price limit or the price limit can continue until the close of the day. In developed foreign stock markets, when the stock market fluctuates greatly, the price limit of individual stocks is started.