Question: What Are Stocks?
Answer: Stocks are a share of the ownership of a company. Initially, they are sold by the original owners of a company to gain additional funds to help the company grow. The owners basically sell control of the company to the stockholders. After the initial sale, the shares can be sold and resold on the stock market.
If the company does well, or even if everyone thinks the company is going to do well, the price of the stock goes up. This is how stockholders make a return on their investment. Conversely, if the company does poorly, then the shares decrease in value, and the stockholders lose their investment.
In addition, many companies give a little dividend payment each year to the stockholders, providing extra income.
Stocks and Stock Investing FAQ
- What Are Stocks?
- What Are the Benefits of Stock Investing?
- How Does an Individual Investor Participate in Stock Investing?
- How Do Stocks and Stock Investing Affect the US Economy?
- What Are the Components of the Stock Market?
