The Stock Market – How Does It Work?

Stock is the whole shares in which ownership of a company is divided up. In common terminology, the stocks are collectively referred to as’stock’. Each single share of stock represents a fractional ownership in accordance to the number of shares outstanding. It also means that if the value of such share declines, then the owner of such stock will have to suffer financial loss. If the stock is rising, then the profit realized from such stock sale is also increasing.


The concept of stock exchange is an international system in which shares of stock on the stock market are traded between different brokers. Some companies use stock markets while others do not. Most of these stock exchanges operate throughout the trading day. However, there are also some stock exchanges which operate exclusively for the trading hours of one particular day only.

The most important part about these stock exchanges is that they bring traders and buyers and sellers together. Before this concept came into being, it was difficult for investors to find and buy shares and assets. As a result, those investors who wanted to own shares were forced to remain within their community or country. This restricted them to those stocks that were traded in their local area.

Today, this has become very convenient and simple for all types of investors. All that is needed is an online access code and a personal computer. Once the investor is ready to buy or sell shares, he/she simply enters the buying and selling prices in the given market, and accordingly buys and sells the assets. The benefits that this system offers are unlimited. Previously, only large corporations and government agencies were able to enjoy unlimited ownership rights of stocks.

One of the other advantages that this system offers is the dividend payment. Usually, there will be a fixed rate of dividends paid on stocks. This rate is usually tied to a certain amount of earnings or net worth of a company. For example, if the company earns more than $1 million in a given year, they will be given a dividend check.

As previously mentioned, there are different types of dividends for different types of stock ownership. For instance, some companies will only give their shareholders dividends when they reach a specific age. This is usually a major retirement date, like seventy-five years old, eighty years old, or ninety years old. Others will pay a dividend check once per year, monthly, quarterly, or annually.