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Stock Market for Dummies – How Does The Stock Market Work?

Stock Market for Dummies – How Does The Stock Market Work?

Stock Market for Dummies – How Does The Stock Market Work?


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Home Page > Finance > Investing > Stock Market for Dummies – How Does The Stock Market Work?

Stock Market for Dummies – How Does The Stock Market Work?

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Posted: May 06, 2010 |Comments: 0
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How does the stock market work? What is a stock? both are logical questions to ask before deciding to put your money in the stock market. To help you understand a few important concepts about stock market, in this article we will cover:
• What is a Stock?
• Why does a Company issue a stock?
• What is the benefit of owning a stock?
• Stock Market for Dummies – How does the stock market work?

What is a Stock?
A stock represents shares of ownership in a company. Anyone who owns a part of ownership in a business is called a shareholder or a stockholder. As a shareholder, you will receive a stock certificate that shows you own a piece of a company.

Why does a company issue a Stock?
To raise capital a business can borrow money from the bank or sell (issue) shares of its ownership interest (equity) to the public.

When you own a piece of a company you’re called a shareholder or a stockholder. The proof of shareholder’s ownership in a company is documented in a paper called a stock certificate.

What is the benefit of owning a stock?
If you own shares in a profitable business you can make money in two ways: by receiving dividend or by selling your stocks at higher values.
A dividend is a share of corporate profits that is paid (often in cash) yearly to a stockholder. Not all companies pay dividends. Stocks of company that pays no dividends are called growth stocks. Income stocks are stocks of company that pay dividends.
Stock Market for dummies – How does the Stock Market work?
A stock market is the place where the activity of trading (buying and selling) stocks and other securities (like bonds) takes place. A stock market is orguanised in stock exchanges where the trading of stocks physically or virtually via a computer takes place. There are few major stock exchanges in the world./div>

There are three major stock exchanges in the United States:

The New York Stock Exchange (NYSE).
The American Stock Exchange (AMEX).
The National Association of Securities Dealers Automated Quotation (NASDAQ) .

The other major stock exchanges are:

London Stock Exchange (LSE) in the United Kingdom.
Frankfurt Stock Exchange in Germany.
Euronext which contains the stock exchanges of Paris (France), Brussels (Belgium), Milan (Italy), Lisbon (Portugal) and Amsterdam (The Netherlands).
The NYSE and the EURONEXT have merged and is now called NYSE EURONEXT.

This concludes the basic knowledge about stock market for dummies and how does the stock market works. To learn more about investing in the stock market visit our section of “stock Market Information”

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Christian Bayonne
About the Author:

Christian Bayonne is a do-it-yourself investor, who has been investing in stocks for the last decade. He is also the co-founder of Stock Picks Canada, Europe, US.

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Stock Market for Dummies ? Basic Explanation of Stock Market Terms

Stock Market for Dummies ? Basic Explanation of Stock Market Terms

Stock Market for Dummies – Basic Explanation of Stock Market Terms


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Home Page > Finance > Investing > Stock Market for Dummies – Basic Explanation of Stock Market Terms

Stock Market for Dummies – Basic Explanation of Stock Market Terms

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Posted: Jan 11, 2010 |Comments: 0
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Most of these terms are used in other sectors of the business world. However, they all mostly mean the same thing in the stock market as well. For dummies (stock market dummies of course) who know very little to nothing about these terms, at the end of this article, it should be clear to you what each means. They are:

Stocks – You, probably, often hear that new stocks or shares are issued everyday by a number of companies, but still the question “what is a stock, and why do companies issue it?” remains. The answers to the questions are simple: 1. Stocks can easily be defined as a tiny fraction of the company that’s up for sale to people like you. 2. Companies issue stock as a means to raise money to help finance the smooth running of their daily productions and activities. Clear enough? It should be since this is a snippet of what there is for stock trading for dummies. Capital – Just like every other business situation, in stock trading, the term capital is used to describe “the money invested by companies or individuals to start a business”. If a company issues a stock before it begins operations (highly unlikely except among individual acquaintances), then the revenue generated by selling the stocks could be seen as the capital required for starting the business.

Equity and Debt – Since this article is about stock trading for dummies, you’d easily be forgiven for wondering what these terms, especially “Equity”, means. Basically, there are two ways of which companies can raise money. They can do this by either selling all their stocks to get the required resources or by borrowing money with promise to pay it all back later with interest. The

first methodology is called Equity while the other is called debt. Most companies, or even individuals, do as much as they possibly can to avoid debt; which is why they offer their stocks in the stock market to begin with.

As far as this stock market for dummies article goes, the main benefit of stock trading is that shareholders are eligible to share in the profits of the company. In addition, if the price of the stock rises, stockholders also benefit from it, especially if they choose to sell their shares at that point.

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Mark Crisp
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The Weekly Momentum Stock Trading System
Trade Once a Week for Big Profits
Free ebook “The 7 Habits of a Highly Successful Trader” Here
http://www.stressfreetrading.com

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