Stocks - InvestMentor

Introduction to Stocks

Welcome to Stocks! This course introduces you to one of the financial market’s top wealth-building tools.

You’ll learn how stocks work, why they’re issued, what drives their prices, and how to build a balanced portfolio.

Stocks, or equity, represent ownership shares in a company.

They give investors a claim on assets and profits and can be privately held or publicly traded on a stock exchange, helping companies raise capital.

Soon, you’ll meet Daniel, a graphic designer working to grow his savings.

Let’s follow his journey and learn how to invest in stocks.

Defining Public Equity

Public equity refers to shares of companies listed on stock exchanges like NYSE and Nasdaq. They're available for purchase by anyone.

Unlike private equity, which involves investing in privately held firms, public equity provides transparency and liquidity.

Investors can buy or sell shares during trading hours, and companies must regularly disclose financial information.

This openness allows for informed investment decisions and contributes to market efficiency.

Ownership and Shareholding

An enterprise can be a sole proprietorship, partnership, or corporation.

When a company incorporates and issues shares, its owners are shareholders — each holding a fraction of ownership.

For example, if a corporation issues 10 shares, owning one share gives you one-tenth of a stake in the company.

Shareholders’ liability is limited to their investment.

Majority shareholders control most companies, but in a public company, ownership can be so diluted that major decisions are resolved by voting.

Importance of Stock Markets

Stock markets play a vital role in driving economic growth and innovation.

For companies, stock markets are an effective way to reach a wide pool of investors and raise capital for building new factories, funding research, expanding internationally, making acquisitions, or paying down debt.

For investors, stock markets open doors to a world of investment opportunities across industries.

By channeling resources efficiently, these markets can spark new jobs and fuel economic development.

How Public Equity Markets Operate

Public equity markets function through stock exchanges where shares of publicly listed companies are bought and sold.

Investors place orders through brokers, and trades are executed electronically or, exceedingly rarely, on trading floors.

Share prices fluctuate based on supply and demand: if more investors want to buy a stock, the price tends to rise; if more want to sell, it usually falls.

These markets are regulated to ensure fairness, transparency, and efficiency.

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