Stock Market Basics

• To invest in stocks, you will need to set up your own brokerage account.
• After the IPO, share prices are affected by supply and demand as the shares are bought and sold on the open market.
• Shares of the company may be bought and sold in the stock market.
• A public company is a corporation owned by shareholders.
• Most public corporations were once private companies that, after meeting all regulatory requirements, opted to become public so they could sell shares to raise money (or “capital”).
• After the IPO, the shares are bought and sold on the open market.
• For example, a company whose value is $100 million may want to issue, or sell, 1 million shares at $100 per share or they may want to issue 20 million shares at $5 a share.
• Whether you buy 2 shares for $100 each or 40 shares for $5 each, you have paid $200.
• Since the company’s market capitalization is $100,000,000, either way, you own a .0002% slice of the company pie.

Test your knowledge of stock market basics and how shares are bought and sold in the open market. Learn about public companies, IPOs, market capitalization, and stock prices.