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Business Management 201

A great way to expand a business or raise its capital is to issue shares to its investors. If this is something that you have been considering, but are unsure of what the stock market is or how it works, then it is worth you reading this article.

The stock market has 2 separate functions: 1. The primary market function - whereby businesses raise long term funds for their operations by issuing shares. 2. The secondary market function ? whereby investors can buy and sell such shares.

If an investor buys shares in a company, then they are considered partial owners and are entitled to share in the profit and growth of it. To issue shares, a company must be listed, and in order to get listed, it must be recognized as large enough to be a part of a given market. If a company is listed, it must provide regular reports of its revenues, profits, and all other financial information, so that its value can be determined by the market standards and sold to investors as shares.

Investors are advised on where to invest in shares by a stock-broking firm or financial manager, and buying and selling of them takes place via an electronic trading system that is controlled by the stock-broking firms. A dividend is a share of stock that represents a portion of the company`s profits, and it is through dividends that a private investor will create wealth. The company benefits from shares by raising additional capital, which it why it is in one's interest as a business manager to consider entering the stock market.