Lesson 3: Stocks and Businesses

About 30 minutes — Discussion-based lesson

What You Will Learn

This lesson covers:

What a stock is: a small piece of ownership in a company
How businesses raise money by selling shares
What shareholders are and what they get
How stock prices go up and down

What a stock is: a small piece of ownership in a company

This section covers the key ideas about what a stock is: a small piece of ownership in a company. Discuss with your group or family and explore the concepts together.

How businesses raise money by selling shares

This section covers the key ideas about how businesses raise money by selling shares. Discuss with your group or family and explore the concepts together.

What shareholders are and what they get

This section covers the key ideas about what shareholders are and what they get. Discuss with your group or family and explore the concepts together.

How stock prices go up and down

This section covers the key ideas about how stock prices go up and down. Discuss with your group or family and explore the concepts together.

Check Your Understanding

1. What is a stock?

Answer: A stock is a small piece of ownership in a company. If you buy one share of a company, you own a tiny fraction of that business.

2. Why do companies sell stocks?

Answer: To raise money for growing their business — building new products, hiring employees, or expanding to new locations. Instead of borrowing, they sell small pieces of ownership.

3. What do shareholders get?

Answer: Shareholders benefit when the company grows (stock price goes up) and sometimes receive dividends (a share of the company's profits). But they also lose money if the stock price drops.

4. Why do stock prices change?

Answer: Stock prices change based on supply and demand — how many people want to buy vs. sell. If a company does well, more people want to buy, pushing the price up. If it does poorly, people sell and the price drops.

Key Takeaways

What a stock is: a small piece of ownership in a company
How businesses raise money by selling shares
What shareholders are and what they get
How stock prices go up and down

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