What are stocks? And why are they so important?

Answer 1

OK, I'm a little fuzzy on this but I'll do my best

Stocks are like little peices of a company. A company can share itself with everyone, so it won't have just 1 owner. Each peice of stock is called a "share".

So, lets say you buy a share of stock in Microsoft...now you own a peice of it! Lots of stocks will even pay you a tiny peice of their profits. The better the company does, the more your piece is worth. The worse the copmany does, the less its worth.

Here's why its so important. Lets say you buy 100 shares of Microsoft, and each share costs $90. You just spent $9000...that's a lot of money! If your shares do really well, they'll be worth more. Later, you can sell them for $120 each...which means you can sell them all for $12000. You just made $3000!!! To top it off, while you own shares they'll be paying you a little bit of money on top of it.

The opposite can happen. You can spend $9000, and if the company does really bad they will be worth less later on and you lost that money. That's why everyone's upset at Enron right now...they lied about how well there company was doing, and their stocks went from like $200 a share to $1. People lost a lot of money.

Answer 2

Stocks are pieces of ownership in a company. They are important because if you like a company enough to be part owner, then you are giving them money... and in turn the company will use your money to make a 'better' company. They are also important because if you own enough of the company you can help direct them in what y ou think is important for the company to do.

In reality, companies offer millions of shares and only a very few people can own enough to make a differennce.

Answer 3

1. A medaevil form of punishment. 2. A means of owning part of a public company. 3. A sweet scented flower.