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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
You know where groceries are bought and
sold—at the groce...
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This document was uploaded on 01/16/2014.
- Winter '14