Understanding the Stock Market
The stock market can seem intimidating, but it's crucial to understand for making informed investment decisions. Here, we'll guide you through the basics to help you get started.
What is the Stock Market?
The stock market is a collection of markets where stocks (shares) of publicly held companies are issued and traded. It is a place where investors can buy and sell ownership of such investible assets.
How Does It Work?
The stock market works through a network of exchanges — you may have heard of the New York Stock Exchange or the NASDAQ. Companies list shares of their stock on an exchange through a process called an Initial Public Offering (IPO).
Important Metrics
- Price/Earnings Ratio (P/E): a key indicator of a stock’s potential value.
- Dividend Yield: shows how much a company pays out in dividends each year relative to its share price.
- Market Cap: gives insight into the size of the company.
Still hungry for more knowledge? Check out our Advanced Investing Strategies or visit our Froge Facts Page for something light-hearted!