If I had to ask you, In 2005 what was the best performing stock market or stock exchange in the world? Would Egypt come to mind?

let's say this is a publicly traded company.

When you normally buy a stock on an exchange, as the New York Stock Exchange, you're just buying the stock from somebody else.

And maybe this guy's even growing faster, so maybe they're being conservative by only giving this guy a 10 price to earnings.

In the name of the pizzeria he's going to borrow some money and then maybe invest that in stocks or something.

You also calculate A, B, and for the information vector C, and then as before your reduced omega is obtained with this equation, and your reduced C is obtained with this equation.

When I own a stock in the company, I own a share of the equity, as opposed to a share of the debt, which is the case with the bond.

So Pete creates another share right over here, he gives it to Sal,

Getting you a library card.

But what I want to do in this video is make it a little bit more tangible, to really understand exactly what you're buying when you buy a share of stock.

And then what's left over, which is essentially so this is 2 million of equity, and then you'd have 2 million of equity here this 2 million of new equity, right?

So essentially, whoever lent Loan C, all of these shares are now their shares.

They've never made money.

There's a lot of frictions in investing in penny stocks, because obviously if you have a 10 stock, a 10 stock could go from 10 to 10.01.

And you'll get extra bonus points if you figure out what this company is.

Second round we got 7.50 per share.

The book value is 6.00, but the market saying no, no, no, we are willing to pay 12.00 per share for one of those shares.

It's a pretty easy equation to solve.

And then, when the stock starts to move up they get scared and they buy it, and it causes the stock to move up even more.

I put it in, I don't know, maybe I'm a good investor.

If I buy a share of IBM a lot of people say, oh, I saved I saved my money,

So let's say this company has let me do it in mauve so this company's shares, let's say it has 1 million shares.

Well, what's the market cap?

So that means if all of these numbers are correct, then the stock of that company is worth 6.00 per share.

Right?

And let's say that there are 100 million shares.

So in both of these situations they have 10,000 shares

Another type of dynamic pricing is real time markets.

SCOTT Inc.'s stocks are blue chip stocks.

Get you anything else?

But you're like, no I want to sell them.

The board of directors of a firm is essentially elected by the shareholders.

You don't want to do this 360 times.

So what they do is they just take your earnings number and you divide by the number of shares.

I think I originally set in the original video that we have 500 million shares.

We talked in the first video when we started this series about how different companies have different numbers of shares.

If this IPO if the stock just did this, if it started collapsing, one, people will lose interest in IPOs in general.

But in this case, you literally just take the price of the stock and you divide it by the earnings per share.

And then the stock actually go down. Iets go all the way down to 20, you think that's about how far it's gone go down

And as long as a company doesn't go bankrupt, they'll pay me some interest and pay me my money back.

I'm just buying that share from another guy.

But you just need a little bit more money, you think, to get profitable, right?

To figure out total earnings, we would take this number and multiply by the number of shares.

Right? It can happen in the stock market.

No, they're selling ads to financial services companies.