understanding the stock market reading questions
1. what do corporations issue to make money?
they issue
2. what do corporations get to keep when they sell a part of their company?
3. what are the two reasons why corporations issue stock?
4. what are the rights do you have if you are a stockholder?
5. what is a dividend?
6. how do stockholders benefit from owning stocks?
7. what are some factors that affect stock?
8. how much did the average stock go up between may 1928 to september of 1929?
9. what is \margin buying\?
10. how much money was lost in the stock market by november of 1929?

Question

Accepted Answer

These questions are related to the stock market and corporate finance, which fall under the Business discipline, specifically the subfield of Finance (or Economics/Management could also be relevant, but Finance is the most direct for stock market topics). Since these are reading comprehension questions about stock market concepts (no calculations needed), we'll use the Answer - Explanation Format for each sub - question:

### Question 1
# Brief Explanations:
In the context of the stock market, corporations issue stocks (or shares) to raise money. Stocks represent a portion of ownership in the company, and by selling them, corporations can generate capital.
# Answer:
stocks (or shares)

### Question 2
# Brief Explanations:
When a corporation sells a part of its company (by issuing stocks), it gets to keep the money (capital) from the sale of those stocks. This capital can be used for various purposes like expanding the business, paying debts, etc.
# Answer:
the money (capital) from the sale of stocks

### Question 3
# Brief Explanations:
One common reason corporations issue stock is to raise capital (money) for business operations, expansion, research and development, or paying off debts. Another reason can be to spread the ownership and risk of the company. By having more stockholders, the financial risk of the company is shared among a larger group.
# Answer:
1. To raise capital (money) for the company. 2. To spread ownership and risk.

### Question 4
# Brief Explanations:
As a stockholder, you have the right to vote on important corporate matters (like electing the board of directors), the right to receive dividends (if the company distributes profits), and the right to a portion of the company's assets if it is liquidated (after creditors are paid). Also, you have the right to sell your stocks in the stock market.
# Answer:
- Right to vote on corporate matters. - Right to receive dividends (if declared). - Right to a share of company assets (upon liquidation). - Right to sell stocks.

### Question 5
# Brief Explanations:
A dividend is a distribution of a portion of a company's earnings (profits) to its shareholders. It is usually paid out in cash, but can also be in the form of additional stocks. Dividends are a way for companies to share their profits with the owners (stockholders) of the company.
# Answer:
A dividend is a portion of a company's profits distributed to its shareholders.

### Question 6
# Brief Explanations:
Stockholders can benefit from owning stocks in two main ways. First, they can receive dividends, which are payments from the company's profits. Second, they can benefit from capital appreciation, which is when the price of the stock increases over time, and they can sell the stock at a higher price than they bought it for, making a profit. Also, they have voting rights which can influence corporate decisions.
# Answer:
- Receive dividends (from company profits). - Benefit from capital appreciation (selling stock at a higher price). - Have voting rights in corporate decisions.

### Question 7
# Brief Explanations:
Many factors can affect the price of a stock. Company - specific factors include the company's financial performance (like earnings, revenue), new product launches, management changes, or legal issues. Economic factors include interest rates (higher interest rates can make stocks less attractive), inflation, and the overall state of the economy (recession or boom). Market - wide factors include investor sentiment (how optimistic or pessimistic investors are), and industry - related factors (like changes in technology in a particular industry).
# Answer:
- Company - specific: financial performance, management changes, etc. - Economic: interest rates, inflation, economic state. - Market - wide: investor sentiment. - Industry - related: technological changes in the industry.

### Question 8
# Brief Explanations:
Historically, between May 1928 and September 1929, the average stock price went up by about 40% (this is a historical fact related to the stock market bubble before the Great Depression).
# Answer:
about 40%

### Question 9
# Brief Explanations:
Margin buying is a practice where an investor buys stocks by borrowing money from a broker. The investor pays a portion of the stock price (the margin) and the broker lends the rest. This allows investors to buy more stocks than they could with just their own money, but it also increases the risk of losses.
# Answer:
Margin buying is when an investor buys stocks by borrowing money from a broker, paying only a portion (the margin) of the stock price.

### Question 10
# Brief Explanations:
By November of 1929, during the stock market crash, approximately $30 billion was lost in the stock market (this is a historical figure related to the Great Depression - era stock market collapse).
# Answer:
approximately $30 billion

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