Stocks and the Stock Market
The stock exchange is a marketplace where brokers buy and
sell stocks and bonds for other people. Many countries have
one or more stock exchanges. Smaller stock exchanges often
handle only national stock, whereas the big stock exchanges
handle the stock of big international corporations. ( )
A person who buys stock becomes one of the companys
owners. They buy a share of a company. A bond is an
agreement to lend money to a company for a certain period of
time. Companies sell stocks and bonds to people because
they need money and want to expand. Sometimes they want
to build more factories or develop more products.
If a company makes profits it can use the earned money in a
few ways. It may decide to invest more into the company and
expand. Most of the time the shareholders of the company get
a dividend, which is a part of the yearly profit. This dividend is
not always the same and can change from year to year.
Most corporations offer two kinds of stock. Owners of common
stock can go to the annual meetings of stockholders, present
their own ideas there, ask questions about the company and
have a right to vote for the board of directors.Owners of
preferred stock usually do not have voting rights or the right to
attend stockholders meetings. However, they get dividends.
A person who buys a bond is not buying ownership in a
company but lending the company money. It promises to give
back the money to the bondholder after a certain time, such
as ten or twenty years. In return for the money, the companies
pay interest. Not only companies but also governments can
issue bonds if they need money.
People buy stocks and bonds because they hope that a
corporation will earn money as it grows. As time goes on
shareholders usually earn more money by owning stock than
by saving their money in a bank or investing in other things.
Buying stock is also a risky business. If you buy a share of a
certain company and it does well over the years the value of
your shares will go up. You could sell them at a much higher
price than when you bought them. Sometimes, however,
things happen that make the value of certain stocks go down.
If a company does badly or goes bankrupt the value of your
shares goes down too and you actually lose money.
There are many reasons why the price of a companys stock
rise or fall. For example if people are afraid that prices will go
down, they may start selling their shares. If many people sell a
large number of stocks, they can actually make prices go
down. If this continues for a longer time it may lead to a crash.
Prices of stocks fall so low that people dont want to buy them
anymore because they are afraid they wont get their money
back. ( )
Each year investors trade billions of shares worth hundreds of
billions of dollars. But not all companies are listed on the stock
market. You must be pretty big and have a lot of power. You
must also show the stock exchange that you are in a good
financial position and that you company is doing well. The
worlds biggest stock exchange in New York has about 30000
To see how well or badly stocks are doing most stock
exchanges have an index. This is a number that shows the
average share prices of the major companies. The most
important indices are the Dow Jones (New York), FTSE
(London), DAX (Frankfurt), Nikkei (Tokyo), Hang Seng
(Hongkong). ( )
The first European stock exchange was founded in Antwerp,
Belgium in 1531. The first stock exchange in England was
formed by a group of brokers in London in 1773. Until that
time people usually went to coffee houses to buy and sell
stocks because they found the brokers there.
In New York City brokers met under an old tree on Wall
Street. They organized the New York stock exchange in 1792.
For many years only rich people bought and sold stock. It was
not until World War I that more and more private investors
started investing their money in stocks. There was a huge rise
in value and investors made a lot of money.
The worst crash happened in the United States in October
1929. Over many days investors sold so many stocks that the
whole market collapsed. This affected the economy not only in
America but in Europe as well. Farmers could not sell their
crops, factories couldnt sell their products, banks had to close
and workers earned very little money. This lasted for almost
ten years and became later known as the Great Depression.
NOTA: De acordo com site economywatch.com, stocks e shares são
basicamente a mesma coisa: Stocks and Shares are the two sides of the
same coin. Basically, they both mean the same thing. (...)
Stock is a general term for Shares. Stock is the ownership of certificate (either
in physical or dematerialized form) of any company. Hence we can say that
Stock is the share of any company. ( )
Assinale a alternativa cuja informação está consonante com o texto.
a) Os bonds não são acessíveis apenas ao governo, qualquer empresa ou pessoa pode adquiri-los.
b) As bolsas de valores são locais onde os corretores negociam a compra e a venda de empresas.
c) As bolsas de valores foram criadas especialmente para a negociação de ações internacionais.
d) A primeira das bolsas de valores a ser criada no mundo e a mais importante delas é a de Nova Iorque.
e) As ações preferenciais têm esse nome porque dão a seus proprietários o direito de votar e participar ativamente nas decisões de uma empresa.