When a company wants to raise money in order to use that money to fund research or create products it will sell its shares on a stock market. The first time a company sells its shares is known as an "Initial Public Offering". All of the money paid for the shares goes back to the company.
People who buy shares do so in order to be paid money from the company's earnings. These payments to shareholders are known as "dividends". For example, if own 10 shares of ABC ltd. stock and ABC earns $100 dollars, ABC ltd. may decide to pay a $1 dividend. This means that for every 1 share I have I will receive $1. In this example, I have 10 shares so I would receive $10.
Once the shares have been purchased from the company, the shares can be traded on the stock market. The stock market is really just a place where people can trade ownership of various companies, just like a fruit market or a "flea" market where you can buy and sell groceries and clothing items. When you buy a stock from a person who owns the stock - and remember, its not the company selling it now - you pay that money to the seller in exchange for ownership of the share.
To recap, a share makes its way to the market like so:
1. Company wants money
2. Company sells shares of its ownership which is known as "stock" or "shares" to the general public to get money
3. The public buy the shares from the company in order to be paid dividends from the company's earnings
4. People in the public may buy or sell shares they own or want depending on how they think the company is going to perform.
This is a very basic intro but I just tried to give you the "bare bones" structure.
You don't seem to understand the basics, or at least, are uncertain.
The basics are not complicated but need to be understood properly.
Your best bet is to buy a beginner/dummies guide to investment. Read it then start asking questions.
Answer to your side question is Yes. But you don't even seem to know what 'dividends' are.
Please get a book!
Actually stock exchange is a type of exchange which provides assistance to stock broker and trader so that they can comfortably deal in financial instrument to capital market. It also provides facilities of exchange of securities, issuing of share and financial form of payment with complete accuracy and transparency.
http://sot.ag/2m7qD/
I somewhat understand the basics of stocks and the stock market, but can someone please explain it in depth? Also, a side question is: Do they get money by selling the stocks or do they get "payments" for owning the stock?
Thanks
