The stock exchange: A simple explaination
Oct 2nd, 2008 by kfisher
In simple terms the stock exchange is a business market place where public limited companies can sell shares in their business and is essential for the business to grow. Anyone can choose to buy shares.
By buying a share you are buying into part ownership in that business. This means you own it, along with the many other shareholders, whom can sell you shares whenever you decide to invest in more.
The business will employ its own board of directors making decisions and controlling the business on behalf of all the shareholders. The price of each share can rise or fall depending on how well the business is doing or how much profit is being made.
For example, if the business is doing well and your share price goes up, you will get a larger return per share if you sold them on, as opposed to waiting until the company enters a financial decline.
You may buy as many shares as you like up to a certain point. However, if a single person owns more of the shares than everyone else put together, the business becomes a privately owned company, meaning this person has overall control of the business.
By Kimberly Fisher
