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UNIT 5 How Does the Stock Exchange Work?
Integrated Skills Development
Passage The Stockbroker
Many different kinds of people buy shares of stock in the stock market. People who buy shares of stock in a company may make money in two ways. They may begin to make money right away. Suppose that a person invests in a company, and the company makes money. The company shares this money with the investor. This money that is shared is called a dividend. Dividends are usually sent to investors once every three months while they own the stock. A second way that investors may make money is to sell the stock at a higher price than the price they paid when they bought it. The price of each share of stock goes up if the company does very well. It may also go up for many other reasons. But when it does go up, a person may sell it and make a profit.
Here is an example of how this process works. Mr. and Mrs. Smith want to invest in the stock market. They have $1000 to invest. They talk to a person who can help them to buy a good stock. This person is called a stockbroker. The broker is licensed to buy and sell stock on the stock market. The broker tells Mr. and Mrs. Smith about the Ward Pencil Company. This company is making a lot of money by manufacturing pencils. It is selling shares of stock in order that it can get money to expand. The shares cost $5 each. The Smiths decide to buy 100 shares of stock in the Ward Pencil Company. The broker fills this order, and the Smiths own these 100 shares. In three months, the Ward Pencil Company issues a dividend of $1 per share. The Smiths have 100 shares, so they get a $100 dividend. In one year, the company expands. The company sells many more pencils. The price of the stock goes up to $6 for each share. Mr. and Mrs. Smith decide to sell their stock in the Ward Pencil Company at $6 a share. They get back $600, plus all of the money they have received in dividends. This is a very good investment.
The process of investing money in the stock market is somewhat more complex than this. But for everyone who wants to invest money in the market, the process is basically the same. Almost all stock markets work the same way. In each country, of course, there are special laws for the stock market, to make sure that everyone has a fair chance to make money by investing.
Investing money in the stock market is a gamble. Everyone hopes to make money by investing. Companies that need money are glad that many people are willing to gamble in order to make money. The stock market is a very interesting and complex part of the business world.
New Words and Expressions
basically
ad. 基本上，主要地
broker
n. 经纪人
complex
a. 复杂的
dividend
n. （股份的）红利
