How stocks actually work

How companies raise money by selling shares, and how you make or lose money owning them.

What is Trading?Lesson 3 of 8

All lessons

By the end of this lesson you'll be able to:

01Explain what a share is and why companies issue them
02Describe how shareholders make money
03Explain what moves a share's value

Step 1 · Read the guide

Read the guide first

Everything the quiz asks is covered in the linked guide. Read it, then answer the questions below.

How Do Stocks Work? Share Ownership and Price Discovery

Key terms

Stock Market Blue Chip Dividend IPO

Step 2 · Take the quiz

Quick check

10 questions

Answer all 10, then check. Wrong answers show a hint and a link back to the guide.

Question 01
Why do companies issue shares to the public?
Question 02
What does owning a share make you do?
Question 03
As a shareholder, how can you make money?
Question 04
A company grows its profits strongly for years. What is its share price likely to do?
Question 05
What are dividends?
Question 06
If a company goes bankrupt, where do common shareholders usually rank to be paid?
Question 07
You buy 10 shares at $50 and sell at $60. What is your gain before costs?
Question 08
What sets share prices on an exchange?
Question 09
What does a 'blue chip' stock generally refer to?
Question 10
Compared with bonds, what do shares generally offer?

Answered 0 of 10 · pass 70% (7/10) to complete

What is Trading?3 of 8

How stocks actually work

How companies raise money by selling shares, and how you make or lose money owning them.

What is Trading?Lesson 3 of 8

All lessons

By the end of this lesson you'll be able to:

01Explain what a share is and why companies issue them
02Describe how shareholders make money
03Explain what moves a share's value

Step 1 · Read the guide

Read the guide first

Everything the quiz asks is covered in the linked guide. Read it, then answer the questions below.

How Do Stocks Work? Share Ownership and Price Discovery

Key terms

Stock Market Blue Chip Dividend IPO

Step 2 · Take the quiz

Quick check

10 questions

Answer all 10, then check. Wrong answers show a hint and a link back to the guide.

Question 01
Why do companies issue shares to the public?
Question 02
What does owning a share make you do?
Question 03
As a shareholder, how can you make money?
Question 04
A company grows its profits strongly for years. What is its share price likely to do?
Question 05
What are dividends?
Question 06
If a company goes bankrupt, where do common shareholders usually rank to be paid?
Question 07
You buy 10 shares at $50 and sell at $60. What is your gain before costs?
Question 08
What sets share prices on an exchange?
Question 09
What does a 'blue chip' stock generally refer to?
Question 10
Compared with bonds, what do shares generally offer?

Answered 0 of 10 · pass 70% (7/10) to complete

What is Trading?3 of 8

How stocks actually work

By the end of this lesson you'll be able to:

Read the guide first

Quick check

Why do companies issue shares to the public?

What does owning a share make you do?

As a shareholder, how can you make money?

A company grows its profits strongly for years. What is its share price likely to do?

What are dividends?

If a company goes bankrupt, where do common shareholders usually rank to be paid?

You buy 10 shares at $50 and sell at $60. What is your gain before costs?

What sets share prices on an exchange?

What does a 'blue chip' stock generally refer to?

Compared with bonds, what do shares generally offer?

How stocks actually work

By the end of this lesson you'll be able to:

Read the guide first

Quick check

Why do companies issue shares to the public?

What does owning a share make you do?

As a shareholder, how can you make money?

A company grows its profits strongly for years. What is its share price likely to do?

What are dividends?

If a company goes bankrupt, where do common shareholders usually rank to be paid?

You buy 10 shares at $50 and sell at $60. What is your gain before costs?

What sets share prices on an exchange?

What does a 'blue chip' stock generally refer to?

Compared with bonds, what do shares generally offer?