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Investors

Amanda and Jessica's plans require they attract investors who are willing to buy their stock.  They hire a firm to handle the Initial Public Offering (IPO) of their stock, when it will be made available for anyone to invest.

People buy stock with one primary goal - to make money.  There are two ways a stockholder makes money.

The first is through an increase in stock price.  If a stockholder buys 1,000 shares of a stock at $20 it will cost $20,000.  If the stock later rises to $30, the stockholder can sell those 1,000 shares for $30,000 and make a profit of $10,000.  This is called a capital gain.  

If the stock were to drop to $15 instead, when the stockholder sold those 1,000 shares,it would only be for $15,000, which means the stockholder lost $5,000.  This is called a capital loss.

The other way a stockholder makes money is through DIVIDENDS.  If a company is profitable, it will share some of those profits with the stockholders.  For example, a company posts a profit of $5,000,000.  There are 1,000,000 outstanding shares of stock.  By dividing those profits equally among the shares, they will pay a dividend of $5 per share.  A stockholder who owns 100 shares will receive $500 in dividends while a stockholder who owns 20,000 shares will receive a check for $100,000!

Of course usually companies don't distribute ALL their profits.  They keep some of the profit for a variety of reasons.  These are called retained earnings.

Dividends are paid regardless of a stock's price.  In an ideal situation for an investor using the above examples, he'd make a profit of $15,000 ($5,000 from the dividend, then another $10,00 from selling the stock after the increase in stock price).

Some companies share their profits through dividends, while others do not.  Coca Cola (NYSE: KO) has paid a dividend four times yearly since 1920, while Apple, Inc. (NASDAQ: AAPL) has gone years without paying a dividend before its most recent announcement in July 2012.

Remember that nothing is guaranteed!  A company's stock could go down.  A company may not make a profit and therefore would pay no dividend.  That is the risk that every stockholder faces when they invest.