NagbeFinancial5

A share of stock represents a single unit of ownership of a particular business. Some businesses issue thousands of shares of stock while other business have hundreds of millions or even billions of shares of outstanding stock. Petroleum giant Exxon Mobil Corporation has nearly 3.5 billion outstanding shares of stock that are owned by over a quarter million different shareholders. Some individual investors own 10 or 12 shares while institutional investors such as a mutual fund will often own hundreds of thousands of shares. A shareholder's relative ownership position in a company depends both on the number of shares the stockholder owns and on the total number of shares of the company that are outstanding. One hundred shares of stock represent a significant portion of the ownership of a business with 10,000 shares of ownership, but a much less significant stake in a company with 3.5 billion shares of outstanding stock.

Business issue shares of stock, or ownership, in return for contributions of work, ideas, money, or anything else that can improve the economic circumstances of the businesses. The majority of shares are issued in return for money that is used to acquire assets such as equipment, real estate, and items held for resale, and to pay expenses such as wages, utilities, and taxes. Imagine an enterprising person who wants to start a new business. Unless the business is very small or the person starting the business is independently wealthy, the founder will need to recruit outside investors, perhaps including yourself, who are willing to contribute some of the money required to get the business off the ground. You and the other investors are likely to seek an ownership stake in the business in return for providing some or maybe all of the money that is required. Shares of stock issued by the business and held by you and the other investors represent an ownership stake in the business. The founder will almost certainly retain some of the shares, while you and the other investors will own the remainder. Once the company issues shares of ownership to outside investors, the business becomes their company as well as the founder's company. An owner who is able to raise sufficient funds and at the same time retain ownership of over half of the firm's shares of stock will remain in control of the business.

Most individuals must employ the services of a broker to acquire shares of stock. Brokers, sometimes called stockbrokers, might have more formal titles, such as financial consultants and financial executives, depending on the firm where they are employed. Firms that have access to the financial markets where stocks are traded employ brokers to assist customers with their investments, including orders to buy and sell shares f stock. Many individual investors have opened online brokerage accounts that facilitate the buying and selling of stocks without the need to interact with a broker.

Most investors choose to leave certificates for shares of stock they have purchased in the custody of their brokerage firm rather than as for delivery of the certificates. The brokerage company with which you do business will credit your account for shares of stock you own and send regular reports with a record of assets being held in your account. Some investors prefer to take delivery of stock certificates, but this is a personal choice, not a necessity. In fact, many brokerage firms charge an extra fee to deliver a certificate for shares of stock their customers purchase.

The answer depends on whether the shares you purchase are part of an original issued by a company seeking to raise capital or from another investor like yourself who has decided to sell shares the investor purchased at an earlier date. Your money will go to the company if the shares are part of an original issue. A good example is the Electricity Corporation which we are urging Liberians to collaborate with one another to own. Their shares will be part of an original isuue.

On the other hand, if the shares are not part of a new issue of stock, your money will go to another investor who has decided to sell the shares. In most instances you will be purchasing shares of stock from another investor rather than from the issuing company. And this will be occurring very often when the Monrovia Stock Exchange is in full operation.
Many multi-national corporations issued all of their outstanding shares of stock when the companies were initially formed many years ago. Younger companies may have issued shares within the last couple of years.

Once a corporation has issued stock, investors can only buy shares directly if the firm decides to later issue additional shares. Otherwise, shares in the firm must be purchased from shareholders who decide to sell shares they purchased at an earlier date. A few years ago, a friend named Sambu told me he bought 100 shares from a company at $50US a share and few years later he was able to sell those very shares at a price of $75US a share. In other words, he made a profit of $25US a share. He didn't have to go to work for someone to earn that money. All he did was made his money to work for him by investing it so that others will do the work for him. So this was a win-win situation. He created job for someone by buying shares into a company. This person worked, earned a salary and made that company profitable enough to make Sambu earn a little profit from his investment.

Stock transactions reported in the newspapers each morning and on various Internet Web sites during the day represent trades between investors, not direct purchases of shares from corporations issuing stock. Investors sometimes buy shares of stock directly from an issuing company, but these purchases are not reported in daily trading statistics. Most likely, the money you invest when purchasing shares of stock will go to another investor, not the company that issued the shares you are buying. Buy 100 shares of Coca-Cola and your money will not go to Coca-Cola but to someone who has decided to sell 100 shares of Coca-Cola stock they already owned. Likewise, money you receive when shares are sold will come from another investor who has purchased the shares of stock you sold. Transactions between investors are reported in the daily trading data reported by the media.

Companies would find it difficult or even impossible to issue new shares of ownership if investors were concerned they would be unable to readily resell the stock they purchased. Would you buy shares of AT&T, Wal-Mart, or Microsoft if you were uncertain a buyer could be located when you were ready to sell? The liquidity, or ability to dispose of an investment, is a very important consideration for most investors who may later need money for other purposes. Although the company whose shares you purchase is unlikely to receive the money you pay to buy its stock, the firm does benefit from knowledge among investors that its stock enjoys an active secondary market and can be resold by shareholders without great difficulty. Companies often issue stock on more than one occasion, so the market price and liquidity of its outstanding shares is of continuing importance to a firm's directors, who may decide to issue additional shares. In addition, it is likely these directors are also shareholders of the firm.