goodness.

And whatever's left, people are paid with actually shares new shares of the company.

Well, what's the market cap?

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

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

He's a stockbroker.

The Tokyo stock market recorded an unprecedented loss.

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.

SCOTT Inc.'s stocks are blue chip stocks.

They don't want to be the last guy holding the potato.

By applying the same price to earnings, we're saying that the market value of this equity is 210,000, while the market value of this equity is what was it? 189,000.

It is a customary contraction like our

'Company.' It is a customary contraction like our

It's actually horrible.

Where a lot of institutional funds won't look at a stock that's below 5.

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?

That's actually very interesting when a lot of people compare well, actually I won't go into stock returns and things.

Stockbroker.

Stockbroker?

And all of that's great, and it's fine.

And just to make a point here, when you look up a share price in the stock market, or even better, when you buy a stock on the stock market, that money is not going to the company.

They've never made money.

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?

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 dubai.The market is just opening there. I'm sorry.Excuse me,please.

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

let's say this is a publicly traded company.

That's all I have to say right now except for this one thing there is no formula.

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

So... what do we need to make this work?

And you?

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

Then, you can buy back the stock

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.

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

I'm just buying that share from another guy.

We take 7.5 million from this seed venture capitalist.

I think they're CFC.

Corporate loans tend to be for simplicity purposes, interest only loans.

And equity securities you're probably familiar with.

What do you know about his personal life?

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.

So let's say another six months go by.

They probably took some fees or sold the loans for slightly more than they issued the loans for.

And if there wasn't enough money to pay all of the debt holders, then the equity holders got nothing.