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THE MARKET WHISPERER  41

       The Stock Exchange:
         My Place of Work

A Devoted Fan

We’re such strange creatures. We identify with our city, root for our
favorite football team, and even feel proud of our place of work, as long
as our salary keeps rolling in. The stock exchange is my place of work, and
it makes me feel proud. It’s because of traders like me that it continues
to exist and flourish. I contribute to its existence by increasing trading
volume, and in return, I get the chance to earn my income. As future fans,
here’s the history of your future place of work.

Who Needs the Stock Exchange?

Companies need money in order to develop their business. They can recruit
money from their stockholders or borrow from banks. The disadvantage in
bank loans, as we all know, is that unfortunately the loan must be repaid.
Not only must the initial sum be returned, but banks also have this annoying
habit of adding interest. In short, a company requiring a bank loan burdens
itself not only with the repayment of the initial figure, but also the added
amount of interest, all of which slows down the company’s progress. But
a brilliant bypass action was invented: money that doesn’t need to be
returned! It’s called IPO – Initial Public Offering.

What is a Stock?

The IPO is an event in which a company sells shares of stock to the public
in return for the public’s money. What is a stock? It’s a document that gives
its owner the right to a part of the company. When a company is formed,
the company’s owners decide the number of shares that comprise the
company. If this is a new company, with no performance, we can presume
the value of its shares is zero. Once the company begins operations,
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