Jake and his athletic shoe business has been having great success and him and his company decide to also buy a company that manufactures clothing, they think they could do great outfits with them to match their new shoes.
Preferred stock is a better choice than common stock for this decision guys. What do you think?
To raise money in order to purchase this clothing company, the directors issue preferred stock. They issue preferred stock in exhange for clothing and other items from the company instead of just straight cash.
We agree! Lets do it!
One of Jake's stockholders decides he will sell his share of the stock. This will happen in his town in an "over-the-counter-market" because it is still a private/small company.
Goodluck to you!
Although some of Jake's stockholders decided to sell their shares, it did not stop thousands of others to start investing in his company, making it grow. He then got an e-mail asking his company to be listed on the New York Stock Exchange.
If Jake's company pays its yearly fee and meets other requirements, the company is entitled to have its stock bought and sold/traded at the NYSE.
Jake's company is doing outstanding, got on the NYSE, and he is rolling in the cash! And it all started with an idea that came to him sitting through school.