Worth need answer now which statement best describes stocks? a. they should be purchased when prices are high and sold when prices are low. b. they are an investment in a company’s progress and profits. c. they are a type of investment that includes raw materials and natural resources. d. they should be purchased only as long-term investments.

The answer to this is b

Hello!

The stock market is a very complex system. In a nutshell, people will buy stocks. This is an investment. It is kind of like giving someone a small amount of money to buy something for a lemonade stand.

Depending on how well, the company does, you will be paid back a percentage of what you paid depending on how well the company did for helping.

For example if a person needed $10 for supplies to make lemonade, and you give them one of the 10, you have invested in their product. You invested in 10% of the stock. When they have finished selling, you will receive 10% of what they made. For example, if they made $20 from selling lemonade, you would receive 10% of it, which gives you $2, which is an extra dollar in profit.

Usually people do not use stocks on lemonade though. The stock market contains large gatherings of people selling something, such as wheat, corn, cattle, or gold. Small percentages of the sales can be big money for you.

In our lemonade example, the stocks rose. They made more money than what the lemonade originally cost to make. But sometimes, the stock market will drop. This is when the company makes LESS than the original item cost, or they make a negative profit.

For example, if they only made $5 selling lemonade, that is only HALF of what the lemonade cost to make. Therefore you lost half of that dollar you invested. You are still payed 10% of what you invested, but that is $0.50, which is half of your investment. Basically, you don’t want the stock market to drop, or you may lose money.

Usually you don’t receive 10% of the profit, though. The stock market is HUGE. You will receive a very small percentage. But if they make a lot of money, that small percentage can be a good share of money.

In terms of the question, the answer would probably be B, because you follow a company’s progress and profits as your investment will either give or take money. It is all a big risk.

The answer is B.

Hope this helped!