TED-Ed: Oliver Elfenbaum: How does the stock market work?

The video explores the evolution of the stock market from its inception by the Dutch East India Company in the 1600s to its complex modern form. It explains how companies raise funds through IPOs and how stock prices fluctuate based on supply and demand. The video also discusses the various factors influencing the market, such as economic conditions and investor behavior, and emphasizes the importance of long-term investing. With the internet, stock trading has become accessible to everyday investors, allowing them to support businesses and pursue financial goals.

What was the primary reason the Dutch East India Company sold shares to private citizens?

• To compete with other companies

• To reduce the number of ships in their fleet

• To fund their expensive voyages

• To avoid paying taxes

What is the first step a company takes when it decides to go public?

• It opens new branches

• It reduces its workforce

• It advertises itself to big investors

• It starts selling products online

How does an increase in stock demand affect the stock price?

• The stock price decreases

• The stock price becomes unpredictable

• The stock price remains the same

• The stock price increases

What can cause a company's stock price to fall?

• An increase in production technology

• A new product launch

• A rise in investor confidence

• A decrease in demand for its stocks

Why do most professionals recommend long-term investing?

• Because it guarantees quick profits

• Because it is less affected by market noise

• Because it requires less initial investment

• Because it is only for the rich and powerful