Function

Stock is issued by a firm in what is called an initial public offering, or IPO. This IPO issues a percentage of the ownership of the company, which investors bid on and purchase. This sale of ownership contributes capital to the firm.

Features

Stock Markets and Fluctuation

As investors buy and sell stocks on stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ, the price of the stock changes. The pricing of a stock traded on an exchange depends on many things, but because investors have many stock choices, it depends mostly on how valuable the stock is to investors. Companies can create value for their investors by paying out dividends, by growing, increasing revenues and profits and by generally being a good company.

Considerations

Warning

References

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Purpose of the Stock Market

How Do Shares Work?

How Are Stocks & Bonds Bought & Sold?

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