| Understanding the stock market for beginners starts | | | | market. An investor could also choose to purchase a |
| with understanding some stock market basics. | | | | small company that isn't on the stock exchange. That |
| Buying a stock means that you own a part of a | | | | type of purchase is completely different than just |
| company. A stock is the smallest share that is | | | | buying stocks. |
| possible. A stock is issued by companies who raise | | | | An investor should have a broker help make |
| capital to sell a portion of their company. Those who | | | | transactions for him because stocks must be sold |
| hold stock also hold the right to voice opinions about | | | | and bought on a stock exchange. A broker's job is to |
| how a company runs and share the profits (if any). | | | | take orders from a client and buy or sell certain |
| Even though stock owners have some rights, they | | | | stocks. The investor may give the broker orders to |
| do not face responsibility if the company faces a | | | | trade when a stock hits a particular price or what the |
| lawsuit or defaults. The worst that can happen to an | | | | market can take. When a broker gets a specific |
| investor is that their stock will have no value and | | | | instruction, they try to fulfill it by finding an |
| they will lose their investment. | | | | appropriate buyer or seller. The broker works with |
| When a company sells stock, they want to raise | | | | another broker who represents another buyer or |
| capital. They might need extra cash or need to | | | | seller. Each broker will get a commission for the sale. |
| purchase new property. A stock issue has a limit to | | | | Stocks can be more beneficial than other savings |
| the number of shares. When they are issued, the | | | | investments. They represent owning a portion of a |
| stocks are assigned a par value. However, the | | | | company and the right to help make company |
| market will soon adjust par value due to the success | | | | decisions. A share equals one vote. In most cases, |
| of the company and its projected value to grow. | | | | shareholders are asked to voice their opinions on |
| An investor decides to purchase stocks when they | | | | important decisions. A stockholder also will get money |
| think that a company will find success and the stocks | | | | from profits that the company acquires. Profits are |
| will rise in value. Those who buy stock from a new | | | | give as dividends that could be doled out once or |
| company are taking on a greater risk because there | | | | twice a year as the company sees fit. |
| is no guarantee that the company will be successful. | | | | When a company is successful, stocks will rise |
| Those who invest in a well-established company will | | | | accordingly and profits will increase. However, if a |
| have a lower potential risk, but their potential for gain | | | | company is not doing well, the value of the stock |
| is less. For example, those who purchased and held | | | | could plummet. |
| onto Microsoft shares in the beginning saw a great | | | | Stocks have the potential to gain more money than |
| return on their investment. | | | | the average investment, like bank certificates of |
| Stock trading takes place within stock exchanges | | | | deposit and bonds. However, they also carry a |
| such as the NASDAQ (National Association of | | | | greater risk. Investors should be educating |
| Securities Dealers Automated Quotation System) and | | | | themselves about the stock market and find the |
| the New York Stock Exchange (NYSE). This means | | | | right type of strategy to use to make the greatest |
| that companies who are on this system of public | | | | profit. Many will find that they will make more profit |
| exchange can have shares that are sold on the open | | | | in stocks than other type of investment. |