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INDIVIDUAL STOCKS: THE BASICS
What are "stocks"?
Stocks are a way to own the assets and earnings of a company. Companies that offer the opportunity for investors to own their stock place a value on the shares or pieces of the company based upon the value of all the assets of the company and the value of its past, current, and future earnings. A stock can be traded (purchased or sold).
How do companies use the proceeds of a stock issue?
A stock may also be created, and then marketed and sold, when a company wishes to raise capital or cash to help fuel its business development, to pay off loans and other debt, and perhaps to buy back shares from other investors at attractive prices. A company's stock is originally valued when the company first begins, based upon its capital or cash and other initial assets.
What is a "stock market"?
It is a place—whether a physical building or an online virtual environment—where stocks are bought and sold. Stock markets or exchanges, as they are also known, can trade stocks, bonds, and derivatives of stocks and bonds, along with many other financial instruments.
Which stock market opens first?
As the day begins in each part of the world, there is a flow of stock trading. The first of the major markets in the world to open are those in the countries nearest the International Date Line. New Zealand's market opens first, followed by Sydney (Australia),
Tokyo, Hong Kong, Singapore, China, Mumbai (India), and Moscow. Europe then follows, with Switzerland, France, Germany's Frankfurt Exchange, and London, England. Then the North American markets open, in Toronto, New York, and finally Chicago.
Does the stock market ever close?
Because there are stock markets in many parts of the world, investors may trade 24 hours a day.
What are the largest stock markets in the world?
By far the largest stock market is the New York Stock Exchange, which trades $30 trillion worth of stock, followed by National Association of Securities Dealers Automated Quotations (NASDAQ) in New York ($15 trillion); London, England ($10 trillion); the Tokyo [Japan] Stock Exchange ($6.4 trillion); Euronext [Belgium, France, Holland, and Portugal] ($5.6 trillion); Frankfurt, Germany ($4.3 trillion); and Shanghai, China ($4.1 trillion).
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