Corporations issue stock to raise funds at title pawn Atlanta, and investors can purchase these stocks as an investment. After stock is issued, there is an active secondary market for the shares.
Issuance of stock corporations Corporations issue stock when they first “go public.” For example, a business may grow to the point where it is decides to incorporate and to sell ownership rights, as represented by shares of stock, in the business. A company’s first issue of common stock is called an initial public offering (IPO). Investment banks purchase the new shares from the company, which may use the proceeds for a number of purposes, such as constructing and equipping a new plant. The investment banks, in turn, sell the stock to interested investors.
Corporations that already have sold shares of stock may from time to time issue additional shares. Both IPOs and the issue of additional shares of stock are primary market transactions-that is, they are sales by the issuing company. When the shares are first sold, the issuer receives the money.
Other stock transactions After issuing shares of stock, a corporation may alter the number of shares of stock outstanding. This is done through stock repurchases, stock splits, and stock dividends.
The secondary market After stocks have sold initially, they are traded in the secondary market. When stocks are traded in the secondary market, they are traded between investors-the issuing company receives none of the proceeds. Stocks are traded in three major markets in the United States.
The New York Stock Exchange (NYSE) is a centralized market in New York City. The stock of many large companies is traded on the NYSE.
The American Stock Exchange (ASE), a smaller exchange, is also based in New York City.
The over-the-counter (OTC) market is the third major secondary market in the United States. The OTC is not a centralized market-there is no trading floor where OTC stocks are traded. Rather, brokers and dealers who wish to buy and sell OTC stocks are connected through computers that show the latest offers to buy (bids) and sell (asks). The OTC caters to small and medium-sized companies; however, some of the larger OTC companies, such as Intel and Microsoft, are also household names.
Types of common stock Common stocks can be grouped into several broad, sometimes overlapping, categories. These categories are based on historical performance, the company’s dividend policy, how the stock performs in relation to the economy, and the risk associated with investing in the stock can be grouped at title pawn Atlanta.
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