Many people do not fully understand the process of buying and selling stock. Who sets the price on a corporation’s stock? An automobile manufacturer sells a new car to a dealer, who in turn sells it to a user. Some time later the user sells this car, now a used car, to a dealer. A car may be bought and sold through dealers several times before it is junked.
On the stock of a successful, established company, the price is apt to rise, as the company grows larger and older. A share of stock does not go to the “junk yard” unless the issuing corporation goes out of business.
The price of a share in a mutual fund is set automatically by the total market value of all the stocks and other property that the fund owns.
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