investing in your future
Buying and Selling Stocks
When you buy a stock, the price is for a single share as quoted at a specific time. Stocks are traded on the major stock exchanges (NASDAQ, American Stock Exchange, New York Stock Exchange), but you buy stocks through qualified investment firms or online brokerage websites. Once you purchase stock, how can you make money?
- If the company does well enough to provide you with a dividend
- When the company sells off all its assets
- If the company makes enough money to purchase other companies
“A” is correct. Not all companies disburse regular dividends. They may not pay out any at all. Some offer a dividend reinvestment plan (DRIPS), where your dividend is reinvested in more company stock instead of being paid directly to you. Investors also make money by selling their stock for a higher price than they initially paid or by taking part in stock splits (where shares are divided into extra shares) so long as the company continues to do well.