Stage 1: What is the stock market?

The stock market is a way for people, in this case shareholders, to invest money into a company by either buying stocks or shares. Companies sell stocks because it helps them to improve or extend, but by selling them they also give away a small part of their company. It is a great risk to invest money in the stock market because you could either lose a lot of money or gain a lot of money. The price of a stock depends on the demand, so if there is a high demand, then the supply, in this case the stock increases, but if the demand decreases then the supply decreases. The companies try to find the perfect balance, which is called Equilibrium. There is a difference between a stock and a share, a stock is when you have ownership certificates of more than one company and a share is when you have ownership certificates of only one particular company. If you own either of these, you get paid, usually annually, of the company’s profit, this is called a dividend. Like the price of the stocks, the dividend also depends on the increases or the decreases of a company’s income.

There are different ways to invest into a stock market, either you invest in them yourself or shareholders build groups, this is called a mutual fund. It profits them because they put some of their money together and then buy stocks and shares of different ‘similar’ companies and then higher a manager to keep everything under control. For example you want to buy stocks from a soda company, they are both popular and sell similar drinks, because stocks are expensive you can’t decide which one of them will ‘win’ or ‘lose’. That’s why you put your money together with other people to buy stocks of both companies.The three major stock markets are New York Stock Exchange, NASDAQ and London Stock Exchange Group, they sell and buy stocks and show the percentages of change of a stock’s price of different companies. To make it easier to identify a particular stock market, ticker symbols are used. Ticker symbols usually consist out of 3 letter, numbers or a combination of both, for example McDonald’s ticker symbol is McD. The stock market is a huge part of our world nowadays, without it, companies would have a hard time to improve or extend and a lot of people wouldn’t have a job.

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