/biz/ - Business & Finance

[Anonymous No.613623]

Can someone explain to me how exactly stocks work, I'm a little confused regarding some of the specifics.

I know if a business wishes to raise equity finance they issue shares but from there what happens exactly? Do they say sell 49% of their company (Retaining majority so they can be in control of the business activities) and then sell say each 1% of .01% for a specific pre-determined price? Does a business have to meet any certain criteria before selling their shares?

By owning shares what does that entitle you to, a specific fraction of the business's profits or control of the business? What happens if a person ever holds more than 51% of shares in a company?

What dictates share prices rising and declining? Can anyone invest in shares? I've heard there are limits put on the stock market like how much shares you can sell in a single day to stop it from crashing etc.

I have a ton of questions, would appreciate it if someone could answer them all, thanks.

[Anonymous No.613640]

Assuming you're talking about public equity (as in stock you can buy on an exchange)
>Do they say sell 49%
They usually sell less than that in the IPO.
>pre-determined price
For a normal IPO, they basically shop around for institutional investors to sell shares to.
>Does a business have to meet any certain criteria before selling their shares?
Yes, there are regulations they have to follow.
>what does owning shares entitle you to
You own part of the business. That usually means you get to vote for board members, get part of any distributions (i.e. dividends), and have a claim to residual assets in case the company is liquidated.
>what happens if a person ever holds more than 51%
Depends on how the company is set up. In any case that person would have large influence on electing board members.
>what dictates prices rising and declining?
Supply and demand.
>can anyone invest in shares
Yes.
>limits
There are regulations in certain cases. It won't matter to the average person.

[Anonymous No.613684]

>>613640
>>613640
Interesting, thank you

What's the difference between a public stock and other types?

What exactly is an IPO? I have some idea

I've heard some shares gives dividends and others don't, why is this? And why would someone invest in a share without dividends?

Is it in the best interests of the business to have expensive or cheap stocks? How does the fluctuations of share price affect the business?

What makes a mum-and-dad-investor type choose to invest in one stack rather than another?

[Anonymous No.613699]

>>613684
>public vs private
Public is available to the general public through exchanges. Private is not.
>IPO
Initial public offering.
>dividends
They're set by the board; they may feel that reinvesting in the company is better
>price
Per unit they should be affordable. In total they should be expensive.
>affect the business
Their ability to borrow money, how much they can get by selling more shares, etc.

[Anonymous No.613751]

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