Lesson notes
The essentials, in writing.
A stock is ownership
A share represents a fractional ownership interest in a corporation. Potential returns can come from price appreciation and dividends, but neither is guaranteed.
Primary and secondary markets
Companies raise capital by issuing shares in the primary market. Most everyday trading happens later in the secondary market between market participants.
How an order travels
Your broker receives an order and routes it to an exchange, market maker, or another venue. Clearing and settlement complete the transfer.
How the quote works
The bid is the highest current buying price; the ask is the lowest current selling price. The difference is the spread—a real trading cost.
Why prices move
New information changes expectations, and competing orders move through available supply and demand. The last price is history, not a guaranteed next price.
Indexes add context
An index measures a defined basket of securities. It is useful as a benchmark, but it does not predict the future.