Hinglish

The Stock Market

Class 7 Social Science · Chapter 20: Banks and the Magic of Finance · NCERT Exploring Society: India and Beyond section 20.5

Learn

Kabir's family wants to expand their small restaurant but lacks money. Friends could chip in in return for a part of the profits, becoming part-owners. A share works the same way: it is a part-ownership in a company. If a company is a big chapati, each share is one piece; a collection of shares is a stock. Companies issue shares to raise money; people buy them as an investment, hoping their value will rise. Shares are traded at a stock exchange; the Bombay Stock Exchange (BSE), founded in 1875, is one of the world's oldest, once using paper tickets and now computers.

Share prices rise and fall. A company doing well attracts buyers, so its price rises; a bad product, a strike or a loss pushes it down. Government policies, taxes (compulsory payments to the government), political instability, wars, pandemics and disasters (economic shocks) also move prices. When many prices rise together it is a boom; when many fall together, a crash. So shares can bring gains or losses.

Explore: share price up or down?

  1. Sort each event.

Remember

  • A share is part-ownership in a company; shares are traded at stock exchanges like the BSE (1875).
  • Prices rise and fall with company performance, policy and shocks, causing booms and crashes.

Quick check

Why do companies issue shares?

  1. to raise money for their work
  2. to pay taxes
  3. to print currency
  4. to open bank branches
Answer

to raise money for their work. Buyers become part-owners and may gain if the company does well.

Think about it

How does the stock market help turn people's savings into new factories and jobs?

One answer

Many people buy small amounts of shares, which together give companies large sums to build, hire and grow, while investors share in the profits.

Practice

Practise with fresh questions at three levels (easy, medium, hard), some answered hands-on, with hints and worked answers. Get 4 of your last 5 right to finish the topic.