Module 2 of 6 in Stock market foundations
Shares and why they exist
What the stock market is, why companies sell shares, what a share gives you, how shareholders make or lose money, and what corporate actions change.
5 lessons in this module. Progress is saved in your browser as you go.
Before learning how to buy a share, it helps to know what you would be buying. This module starts with the big picture, the market as a place where companies raise money and savers own a piece of businesses, and then zooms in on a single share: what it entitles you to, and the two ways it can make or lose money for you.
By the end of this module you should be able to
- Explain what the stock market is and the role it plays for companies and for savers.
- Describe why a company sells shares instead of only borrowing, and what its owners give up in return.
- Explain what owning a share gives you, including a claim on profits, voting rights and limited liability.
- Calculate a total return from dividends and price changes, and explain how losses happen.
- Explain how dividends, splits, bonus issues, rights issues and buybacks change what a shareholder holds.
Lessons in order
Module test
10 questions, chosen at random from a bank of 44 questions and balanced across this module's learning goals and difficulty levels. Every question comes with an explanation. You need 80% to pass, and you can retake it as often as you like with a fresh set of questions.