S TOCK MARKET

W HAT IS THE STOCK MARKET ? markets

W HAT IS STOCK ? In the Stock Market, companies sell shares to the public. That means that the companies are actually selling power of the company to the public. If you buy 250 shares of a company with 500 separate shares, you own 50% of the company! When you own such a percentage of the company, you have a say in how the company is ran.

A S TOCK ’ S V ALUE When you own 1 share of a company(which has 500 shares total), you own.002 (.02%) of that company. That may not sound very big, but if that company is strong enough, that can be a lot of money! If the company is worth $500,000, and there are 500 shares, each share is worth $1,000

W HEN A COMPANY GOES P UBLIC When a company goes public, the owner of the company decides on how to split the company’s power(how many shares to sell). When someone buys a share, the company gets that money, but can no longer use that share as power.

H OW S TOCKS W ORK Whenever someone buys a share, the company gets those proceeds. This adds to the company’s value, making the price of each stock rise a little. When people sell their stock, the price per share goes down a little, contrary to people buying shares.

S ELLING S TOCKS A share holder can sell his/her stock at any time. The owner gets however much money the shares were worth when s/he sold them.

T HE RISKS If you choose to be a share holder, consider the following: ¶ Knowing a history of the company you’re interested in, and seeking advice from a previous owner of that stock. · Buying at what seems like a “low moment.” This means, buy when the shares are low. ¸ Remembering the general rule of the market, “Buy low, sell high!”

T HE D IFFERENCE B ETWEEN THE S TOCK M ARKET & S TOCK E XCHANGE The stock market represents the companies that list equity shares for public investors to buy and sell. Stock exchanges are the infrastructure that facilitate the trading of those equity securities, or stocks. Stock exchanges can be electronic or manual, and they provide telling information about the size of the stock market.

H ISTORY OF THE STOCK MARKET Dirt path in front of Trinity Church in East Manhattan 200 years ago. At that time, there was no paper money changing hands, or even the idea of stocks. They traded silver for papers saying they owned shares in cargo, that was coming in on ships every day.

During the American Revolution, the Colonial Government needed money to fund its wartime operations. One way they did this was by selling bonds. Bonds are pieces of paper a person buys for a set price, knowing that after a certain period of time, they can exchange their bonds for a profit.

T HE C RASH !4

Along with bonds, the first of the nation's banks started to sell parts or shares of their own companies to people in order to raise money. they sold off part of the company to whomever wanted to buy it, which is the basis of the modern day stock market.

Wall Street was becoming a major center of these transactions, and in 1792 twenty-four men signed an agreement that started the New York Stock Exchange (NYSE). They agreed to sell shares or parts of companies between themselves and charge people commissions, or fees, to buy and sell for them. They found a home at 40 Wall Street in New York City. As they grew they later moved into what is currently the New York Stock Exchange Building.

Today, the New York and the American Stock Exchanges, have been joined by the NASDAQ, and hundreds of local and international Stock Exchanges, that all play a part in the national and global economy.