78. STOCKS, STOCK MARKETS, AND STOCK EXCHANGES

As recently as 1960, only about 10 percent of all households owned shares of stock in corporations. Today, due in part to individual retirement savings needs, that figure has grown to exceed 50 percent, that is, 1 in 2 households across the U.S. own shares of corporations.

The discussion of stocks and stock markets cannot be possibly completed in this small of a space; it’s the subject for an entire book. What’s important to know is that stock represents the owners’ interest in a corporation; that interest is divided into shares, and those shares are traded on one or more stock exchanges that comprise the stock market.

What You Should Know

Stocks can be listed on stock exchanges if they meet certain criteria in terms of size, volume, and share price given by the exchange. The exchange is a corporation or organization set up to bring buyers and sellers together, either in person or electronically. The exchange handles all incoming orders, executes them by matching a buyer to a seller, and routes the proceeds as funds to the appropriate parties.