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NeoWarrior7 wrote:Stocks are sold to give a company money. They sell shares of the business, and use the money to grow and expand, typically. When they do well, the company is worth more, and so the stock goes up. If they're having problems, stocks go down. Or such is my understanding. As a stock holder, you have say in the company's direction, but I'm not sure how often this really happens unless you own a whole lot of a company's stock. And/or, you get paid a dividend. Basically, companies take a portion of the profits that they aren't reinvesting, and pay it out to shareholders. Not sure how much or how often, probably varies.
Googling liquidity gave me this, which is what I basically thought it meant.
"The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity. Assets that can by easily bought or sold, are known as liquid assets"
Basically, liquid assets can "flow", or so I assume that's why they chose liquid. Stocks are liquid, as they get sold and traded all the time. Money's a big liquid asset, as they can typically be moved around easily. Pretty much anything that's money or can work like it. Non-liquid assets are, well, your equipment, buildings, any other non-tradable asset, I'd guess.
Stocks are traded on, you guessed it, the stock market and stock exchanges. Wall streets a big one, but NASDAQ I held a lot of fake stock in, because it tends to have you electronics companies, software producers, video games and computers, all that jazz. There are others, typically in major countries. I'd assume you, for example, would deal with or through the London Stock Exchange, I suppose. I'm going mainly on a few assumptions, really.
Why do people trade them? Money. Same as any market. Buy low, sell high. Beyond personal profit, and good stock traders can rake in a lot of cash, most people invest in them, if they have the money. Stocks, bond, all your other securities. They're typically a good place to store cash. In a good market, you should make a little cash, and if not hopefully they stay steady. A good balance of stocks, bonds and others are you hand money to a brokerage or retirement fund to invest in for you. Or, the market collapses, and well, a recession happens. Pretty much everyone stores cash in securities these days, which is why when it drops things go to the shitter. There are other reasons I believe, but this is a big one.
Sorry if I get a lot of words mixed up, it's been a while. This semester we're focused on the school store. Frankly, they're a complicated matter. That's why it's a whole avenue of education. It's also a major source of wealth, which is why, you know, those folks that get a financial degree tend to be filthy rich, along with bankers and whatnot.
Grey wrote:they are one of the leading market liquidity providers
icha_icha_paradise wrote:Isn't liquidity sorta like taking something with a certain value, then turning it straight into cash?