It allows jones either to invest in smiths company or

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Unformatted text preview: t a financial market does, though, is bring these two people together. It allows Jones either to invest in Smith’s company or to lend Smith some money. For example, Jones might buy stock in Smith’s company or perhaps buy a bond that Smith’s company is issuing. In this chapter you will learn more about the ways in which people 430 Chapter 16 Stocks and Bonds like Smith and Jones help each other through use of the financial markets. What Are Stocks? What does it mean when someone tells you that she owns 100 shares of a particular stock? For example, suppose Jane owns 100 shares of Yahoo! stock. It means that she is a part owner in Yahoo!, Inc., which is a global Internet media company that offers a network of World Wide Web programming. A stock is a claim on the assets of a corporation that gives the purchaser a share in the corporation. Jane, in this example, is not an owner in the sense that she can walk into Yahoo! headquarters (in Santa Clara, California) and start issuing orders. She cannot hire or fire anyone, and she cannot decide what the company will or will not do over the next few months or years. Still, she is an owner, and as an owner she can, if she wants, sell her ownership rights in Yahoo!. All she has to do is find a buyer for her 100 shares of stock. Most likely, she could do so in a matter of minutes, if not seconds. 16 (428-459) EMC Chap 16 11/18/05 9:33 AM Page 431 QUESTION: If I buy shares of stock, do I have to hold on to them for any set period of time? Also, where can I buy shares of stock? ANSWER: No, you can buy shares of stock at 10:12 in the morning and sell those shares five minutes later if you want to. As for buying stock, you can buy stock through a stock broker—in person, on the phone, or online. For example, many people today buy stocks from an online broker. They simply go online, open an account with an online broker, deposit funds into that account, and then buy and sell stock. Where Is Stock Bought and Sold? You know where groceries are bought and sold—at the groce...
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This document was uploaded on 01/16/2014.

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