How Do Stocks Work?
When you buy the stocks of a company, you own a segment of the business. When a company wants to raise more money, it often issues shares via an Initial Public Offering (IPO) whereby the price of the shares is determined based on the estimated value of the company. The company is able to keep the cash raised to fund its operations while the stocks (or shares) continue trading on the regulated exchange, like the New York Stock Exchange (NYSE).
Investors and traders get to buy and sell the shares of the company at the exchange, but the company itself does not reap any monetary benefit from this kind of trading. However, the company gets money from the Initial Public Offering.
What’s A Stock?
A stock refers to a share of a company’s ownership. A shareholder is one of the many owners of a given company …Continue Reading