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Frequently Asked Questions (FAQs) on Stocks

1. What is an IPO?

2. How much does it cost to buy stock?

3. Is there a minimum number of shares I have to buy?

4. What happens when I give my broker a buy or sell order?

5. What does a broker do?

6. Can I buy and sell stock quickly?

7. How long should it take from the time I enter the order until my broker receives confirmation of trade?

1. What is an IPO?
   When a company reaches a certain stage in its growth, it may decide to issue stock, or go public, with an initial public offering (IPO). The goal may be to raise capital, to provide liquidity for the existing shareholders, or a number of other reasons. Any company planning an IPO must register its offering with the Securities and Exchange Commission (SEC). Every company whose stock trades publicly at one time or another had an IPO. It gave some of the stock to previous investors to compensate them, and gave some of the stock to an investment banker who helped with the IPO, and it sold some of the stock to the public. When the company received the money for the stock it sold, it then used that money to continue to invest in its own growth.
    
2. How much does it cost to buy stock?
   Since May 1975, when the brokerage industry became deregulated, paving the way for discount brokerage firms, the commissions or transaction charges of full-service brokers have widely varied. Every brokerage charges a different commissions to trade stocks. Commissions on trades vary based on things like the type of trade (e.g. market order versus limit order). Even the way the trade is done impacts the price; commissions are different for online orders, touch-tone phone trades, and broker assisted trades. See the comparison of several discount and online brokers Commissions and fees... 
    
3. Is there a minimum number of shares I have to buy?
   There is no minimum, but the most common type of order is for 100 shares. This is called a round lot. Order of less than 100 shares called an odd lot.
    
4. Can I buy and sell stock quickly?
   That depends on the stock you own or wish to own. Most stocks listed on the New York and American stock exchanges and many listings on NASDAQ are actively traded and therefore extremely liquid. The only time you will encounter trouble is with a stock issue that trades infrequently, or when there is an imbalance of buyers or sellers, such as investors experienced on Black Monday, October 19, 1987. In that case, you will have to wait until a buyer or seller can be found.
    
5. What does a broker do?
   Brokers are the people who handle customer orders to buy and sell securities. In the same way that real estate broker act as a middleman between buyer and seller of a house, a stock broker acts as a middleman between the securities that trade on the market and the investors that buy them.
    
6. What happens when I give my broker a buy or sell order?
   A lot is accomplished, or should be, in a very short period of time!
    

   The broker writes up your order on a ticket and hands it to a wire operator right in the branch office. This operator then enters your order into a computer. The order is then transmitted to your firm's order desk on the floor of the proper exchange. The order is transmitted from the order desk to the particular trading booth reserved for that company's stock and handed to the floor broker. The broker completes the transaction as quickly as possible and returns the transaction slip to the firm's order desk on the floor. From there, the computers reverse the direction your order first took: from order desk to main office to branch office to your broker to you.

7. How long should it take from the time I enter the order until my broker receives confirmation of trade?
   In this day and age of internet, market order entered online may take only a few seconds. Back in the days, even an efficient firm working with stock that is constantly trading may make the trade within two to five minutes on an average day. On Black Monday (October 19, 1987) many investors didn't get status reports on their trades for hours, and some not for days.

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1. Spend less than you earn! People who spend every penny they make usually end up going broke.......
2. Take enough risk on the money you save! Playing safe by putting your money under the mattress or in a savings account will not make you wealthy..

Remember that..... Fully one-fifth of humanity, some 1.3 billion people, struggles to survive on less than $1 per day. About 40% of humanity survives on less than $2 per day. More than a billion people around the world will go to bed hungry tonight. Life expectancy in some 32 countries is less than 40 years. If you have a few extra dollars in your pocket (you don't have to be a millionaire to make a difference), please share some of your financial good fortune with others who are in great need.

Think About It...  Being in the 'now' brings a freedom, unlike living in the past or in the future, which is a kind of imprisonment. This isn't a kind of a denial where you pretend life doesn't have problems. Life is full of problems, but most of those stresses and failures are reliving old hurts or worrying about future concerns. -- Carl Honore

When you 're diagnosed with cancer, you start to bargain with God: "Let me get through this, and I'll take better care of myself. I'll get my priorities in order. I'll learn to live every day to the fullest." Isn't it sad that you have to get sick before giving yourself permission to live life to the fullest? -- Robert Schimmel Look at Life in different & Positive ways