3. The Stock Market
a. Definition of Stock: a claim to partial ownership in a firm.
b. The sale of stock to raise money is called equity finance; the sale
of bonds to raise money is called debt finance.
c. Stocks are sold on stock exchanges (like the New York Stock
Exchange or NASDAQ) and the prices of stocks are determined
by supply and demand.
d. The price of a stock generally reflects the perception of a
company’s future profitability.
e. FYI: How to Read the Newspaper’s Stock Tables? shows an
example of a stock table from the newspaper and then explains
what each of the columns means.