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