Stock exchange

High school (ages 12+)
People & Society

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/stock-exchange

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the primary economic function?Facilitates capital formation for corporations and provides liquidity for investors
2. What is the core operational principle?Price discovery through the interaction of supply and demand for securities
3. How do people buy and sell shares on a stock exchange?Most trades happen on computers, not in a physical room. Buyers and sellers use electronic orders that match up, so the price is decided by how many people want to buy or sell.
4. Why do companies sell shares?By selling shares, a company can get money to grow, build new products, or research. The money comes from investors who own a small part of the company.

Initial Public Offering (IPO): The first time a private company offers its shares to the public on a stock exchange.
Liquidity: The ease with which an asset can be bought or sold without significantly affecting its price.
Counterparty Risk: The risk that the other party in a financial transaction will not fulfill their contractual obligations.