When people invest in stocks, does the money the spend become real money that the company then uses?

Question

What happens to the money people spend on stocks?

Answer 1

The company gets the money only on the initial public offering.  "A" buys at the IPO's after broker/investment banking fees, the company gets the money.  "A" then sells the stock and gets the money after broker fees, from E-trade who gets it from Scottrade who adds their fee to the cost, who gets it from their customer "B" who buys the stock.  Kind of like buying a new car from a dealer then selling the car through a newspaper (broker) ad.

Answer 2

If you buy your stock from the company, they get it as cash. More likely you will buy your stock on the stock market, in which case it goes to whoever sold you the stock.

Answer 3

No not directly but indirectly......such as salaries,stock options,bonuses,legal inside trades, & ect.

Answer 4

The company uses the money gained from stocks to fund business ventures. It isn't the only way of finance, but it acts as a good blanket.

For example, say you started up a Drink company called A. You start selling this Drink called A and everyone around town loves it. However, the money you earn and have saved isn't enough for you to expand. So what do you do? You give what is called an Initial Public Offering and from then on, you start selling stocks so that any member of the public is funding your business. In return, they get part ownership of your company and get some of the profits (or non-profit) the company earns.

Answer 5

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