Introduction To The Stock Market.

1. What exactly is a stock and why do companies sell stock in the first place?

In the financial market, stock refers to a supply of money that a company has raised. This supply comes from people who have given the company money in the hope that the company will make their money grow. By issuing stock, a company can raise money without going into debt.

2.What is the difference between a public and a private company?

The different between a public and a private company is that a public company's stock is traded by the public and listed on an exchange such as the New York Stock Exchange or NASDAQ. A private company's stock is generally held by one shareholder or a small group of shareholders.

3.What is the Dow Jones Industrial Average?

To be chosen for inclusion in the index, a stock must be a leader in its industry and must be widely held by both individual and institutional investors. Together, the 30 stocks in the average represent about 20% of the market value of all U.S. stocks, so although the DJIA is not the whole stock market, it is certainly representative of the stock market as a whole. The industries represented include financial, food, technology, retail, heavy equipment, oil, chemical, pharmaceutical, consumer goods, and entertainment.

4.What is a blue chip stock?

A common stock issued by a major company that has financial strength, stability against fluctuations, and a good record of dividend payments. Basically a low risk investment.

5.What is the New York Stock Exchange and the NASDAQ?

NYSE is a stock exchange in New York City. It happens to be the largest exchange in the world. It provides a means for buyers and sellers to trade shares of stock in companies registered for public trading. NASDAQ. National Association of Securities Dealers Automated Quotations is American stock exchange. t is the largest electronic screen-based trading market in the United States. It has about 3,200 companies and more trading volume per hour than any other stock exchange in the world.

6.What is a mutual fund and how do they operate?

Is an investment company or trust that has a very fluid capital stock. It is unique in that at any time it can sell or redeem any of its outstanding shares at net asset value. A mutual fund, also called an open-end investment company, owns the securities of several corporations and receives dividends on the shares that it holds.

7.What are some of the biggest companies on the stock market, what is the total value of their stock?

GOOGLE: $420.50
SEABOARD CP: $1,309.00

8.What is the PE ratio of a stock?

The PE of a stock is the Price to Earnings ratio. This is a ratio of the price paid for a stock to the amount earned.

9.What is a stock dividend?

A form of dividend collected by a stockholder in extra shares of the corporation's stock rather than in cash.

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