Stock Market: Beginner’s Guide
A stock market is a meeting place that attracts buyers and sellers of shares in individual companies. Sellers trade their stocks for money, which the buyer lends in exchange for a share in the stock owner’s corporation. A person who holds stock in a given company is referred to as a shareholder. Ideally, stocks will gain value over time. If a stock increases in value, then shareholders will acquire more money. If the stock decreases in value, then money is lost.
Stock Markets Stock markets may occupy a physical place, such as the New York Stock Exchange, or be entirely digital, like the NASDAQ. Each stock market has its own standards regarding methods of trading. In addition, stock markets have dozens of intricacies that traders, investors, and corporations familiarize themselves with.
Stocks A stock, also referred to as a share, is a single-unit representation of a corporation’s worth. The price of a stock varies depending on how well the corporation performs as a business. As stock prices rise and fall, shareholders will become worth more or less money. The more stock an individual shareholder owns in a given corporation, the greater the risk for the individual shareholder. Individual stocks are prone to vast changes in short periods of time. For this reason, they are considered high-risk. Investors are strongly encouraged to diversify.
Bonds A bond is a loan provided to a corporation on behalf of an individual. Bonds are not traded like stocks. Instead, investors receive an interest rate from a corporation. Payments to the investor are made on a fixed schedule.
Mutual Funds While stocks are considered high-risk, mutual funds provide much larger nets of security for investors. Mutual funds are divided into dozens of smaller investments. Mutual funds are shared between multiple investors. Investments include stocks, bonds, equities, and similar assets.
Traders Traders are men and women who usually work for an investment firm. They buy and trade stock for clients. A trader will advise a client on the best stocks to purchase or sell. Traders usually receive payment by charging a commission from each successful trade. A traded stock may remain in the possession of a trader between several seconds to several years.
Investors An investor can be anyone who is legally able to purchase stock. Most investors diversify their investments between stock, hedge funds, and mutual funds. Investors frequently rely on investing firms for advice and management of their investments.
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