BUYING AND SELLING STOCK
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Stock is evidence of ownership in a corporation. Corporations
whose shares are owned by persons outside the "corporate family" are publicly
traded. The Securities and Exchange Commission (SEC) established the National
Association of Securities Dealers (NASD) to make rules to assure the orderly
commerce in publicly traded stocks.
Persons in the business of trading stocks are
and must register with the SEC. When you want to buy (or sell)
shares of a publicly traded stock, you will use the services of a
*. A broker (stockbroker) must pass an examination on securities
law to be licensed to trade securities.
Licensed individuals are
registered representatives of brokers.
Brokerage houses are large firms that deal
in securities and may belong to an exchange such as the New York Stock
Exchange or the American Stock Exchange.
*Some companies allow shareholders to purchase shares directly from them without having to use a broker. Many others offer dividend reinvestment plans, which use the investors' earned dividends to buy additional shares of stock.
You have a choice of which broker to invest with. Different
brokers provide different services. The next screen will explain what these