2007-10-30 16:35:56 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
The money goes to the company under a few sets of circumstances:
1. If you buy the shares in an IPO (Initial Public Offering) the money goes to the company
2. If you buy the shares in a SEO (Seasoned Equity Offering) the money goes to the company
3. If you buy the shares through a DRiP (dividend reinvestment program) then the money goes to the company
4. If you buy the shares by exercising employee stock options or warrants, then you are buying from the company.
In general, you are buying from someone else if you buy in the secondary market (e.g., through the NYSE or NASDAQ). Similarly, if you are buying them by exercising exchange traded options, then you are buying them from someone else.
I say "in general" -- because some companies will buy back shares of their stock and hold them in the treasury. If they need cash in the future, they are allowed to sell their treasury stock through the secondary market. Therefore, there is a very, very small chance that if you buy stock through an exchange you could be buying it from the company.
2007-10-30 16:52:28 · answer #1 · answered by Ranto 7 · 2⤊ 1⤋
The money eventually gets to the company, but it goes through a broker or other financial institution. That keeps the stock sales on the up and up. They also are better equipped to track the sales and shares outstanding.
2007-10-30 18:04:33 · answer #2 · answered by Anonymous · 0⤊ 1⤋
The company gets its cash from the IPO. After that the stock is traded between investors, with the broker acting as middle man. The trading is based on offer and demand, or ask & bid. It's like an auction.
2007-10-30 16:53:16 · answer #3 · answered by adam k 3 · 1⤊ 1⤋
Taranto is the winner...move on!
2007-10-31 13:52:07 · answer #4 · answered by HeavyD 3 · 0⤊ 0⤋
u need to improve your basics...
2007-10-30 17:11:44 · answer #5 · answered by Anonymous · 0⤊ 3⤋