Best and Simple Example of Stock Exchange

Best and Simple Example of Stock Exchange

Get ready as we are going to share one of the best and simplest example of stock exchange. Stock exchange is very confusing for many including myself. To be very honest, it was always vague to me as well before I knew this example. But when I read the heading that day “What is Stock Exchange”, I though may be this will be just another piece of paper but it turned out to be a very simple and best example of Stock Exchange. So, if you are one of those who are always confused about what exactly the stock exchange is, don’t worry you will understand everything.

Stock Exchange Example

It is said that a village had many monkeys. A Stock Exchange Company visited the village and announced that they will give $100 for each monkey villagers give to them. There were total of 300 monkeys.

All the village people started catching the monkeys and selling it to the agents of the company. They were happy to have this easy money by just catching and selling monkeys in $100. Now, the company noticed that there are just 150 monkeys left and half of the monkeys have been caught by the villagers. The agents increased the price of monkey and announced that they will give $200 instead of $100 for each monkey.

Village people started to catch monkeys with more speed and joy. When only 50 monkeys were left, agents announced that the price is even increased to $300 and people sold those last 50 monkeys as well. Now, people were happy and sad at the same time. They were thinking about going out of the village and find monkeys and sell it to the stock exchange company.

Here, the stock exchange game starts. Company announces that from now, they will give $1000 for every monkey but sadly there were no monkeys left. Now, stock exchange company’s agents hide their identities and didn’t show that they are from same company and sold the same monkeys at a price of $600 which is double the maximum they bought. Villagers thought they are very wise and why not buy them in $600 and sell in $1000.

Stock Exchange Company sold all 300 monkeys hiding their identity and when people search for the Stock Exchange agents who announced that they will buy these monkeys in $1000. They couldn’t find them. They search a lot but there were no sign of them.

Conclusion

So, at the end of the day, the one who got profited is the stock exchange agency and not the people. We hope that this example clears all the ambiguities in your mind regarding what is stock exchange and how the game of stock exchange is played.

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