Stock Market

THE STOCK MARKET

•In the largest city in many countries around the. world, you may want to visit the stock exchange. There are stock exchanges in Paris, London, Tokyo, Toronto, and many other places. One of the largest, most famous, and most important stock exchanges in the world is located in New York City.

 •Perhaps you can guess what happens at a stock market from its name. It is called a market because it is a place where some people sell things and others buy things. An exchange of things takes place. The things that are exchanged at the stock market are shares of stock in businesses or companies. The shares represent partial ownership of the company. In other words, if you buy shares of stock in a business, you become a partial owner of the business. The stock market or stock exchange, then, is a place where people can buy or sell shares in a particular company or business.

•Investors who buy shares of stock in a company may make money in two ways. They may begin to make money right away. Suppose that a person invests in a company, and the company makes money. The company shares this money with the investor. This money that is shared is called a dividend. Dividends are usually sent to investors once every three months while they own the stock. A second way that investors may make money is to sell the stock at a higher price than they paid when they bought it. The price of each share of stock goes up ¡f the company does very well. It may also go up for many other reasons. But when it does go up, a person may sell it and make a profit.

•The process of investing money in the stock market is Somewhat more complex than this, But for everyone who wants to invest money in the market, the process ¡s basically the same. Almost all stock markets work the same way. In each country, of course, there are special laws for the stock market, 10 make sure that everyone has a fair chance to make money by investing.

•The company may do badly. Then the stock will go down, and the investors will lose money. The stock may go up or down for a number of very complex reasons. Everyone wants the stock market to go up, but sometimes even when a company does well the stock may go down. This is usually true for all stocks.

EXERCISES

1)List three cities which have stock exchanges.

2)What happens at a stock exchange?

3)Who buys stock?

4)Why do people buy Stock?

5)Why do companies sail stock?

6)Explain what dividends are.

7)What is a broker?

8)Explain why Mr. and Mrs. Smith's investment is a good one.

9)Why is investing money in the stock market a gamble?
Do all stocks always go up?