What is the Stock Market? A Beginner's Guide
Learn the fundamentals of the stock market, how it works, and why companies sell stocks to the public.
💡 Key Takeaways
- ✓Stocks represent ownership in a company
- ✓Companies sell stocks to raise capital
- ✓Stock prices are determined by supply and demand
- ✓Major exchanges include NYSE and NASDAQ
The stock market is a marketplace where investors buy and sell shares of publicly traded companies. When you buy a stock, you're purchasing a small piece of ownership in that company.
Companies sell stocks to raise capital for growth, research, expansion, or paying off debt. In return, shareholders may benefit from the company's success through stock price appreciation and dividends.
The two major U.S. stock exchanges are the New York Stock Exchange (NYSE) and NASDAQ. These exchanges provide a regulated environment for trading.
Stock prices fluctuate based on supply and demand. When more people want to buy a stock (demand), the price goes up. When more people want to sell (supply), the price goes down.
Key factors that influence stock prices include company earnings, economic conditions, interest rates, and investor sentiment.
Summary
- 1Stocks represent ownership in a company
- 2Companies sell stocks to raise capital
- 3Stock prices are determined by supply and demand
- 4Major exchanges include NYSE and NASDAQ
Disclaimer: This content is for educational purposes only and should not be considered financial advice. Always do your own research and consult with a qualified professional before making investment decisions.
