Chapter 9.3 Intro to Stock Markets

If you own stock in a corporation, you are:

a part owner of that corporation, and you are entitled to a share of the firm's profits

The key difference between saving in a bank and saving in the stock market is that:

the stock market carries more risk since you are buying a share of a company that might fail

Buying and selling existing shares of stock in a stock exchange:

transfers ownership of the stock but does not give the corporation more money to invest

The profits of a public corporation can be paid directly to shareholders in the form of:

dividends

Stock markets:

encourage entrepreneurship by providing a big payoff for company founders and venture capitalists

IPO stands for:

initial public offering

How do shareholders receive the profit to which they are entitled if a firm decides to reinvest its profits?

Through a rising stock price

When does a stock exchange turn savings into investment?

When new shares of stock are issued

Stocks are traded in:

organized markets called stock exchanges

Stocks are:

shares of ownership in a corporation