Miliean
Miliean t1_j6o3g7q wrote
Reply to ELI5: Who buys the stock I sell? by Raven019
> they get to sell it right away
That's not true, it just seems like it's true. A stock market matches people who are offering to sell a stock with people who want to buy a stock. But it's entirely possible that you elect to sell a stock, and no one wants to buy it, so it won't sell.
The price that you see on a stock market is actually the price of the most recent transactions of that stock. When you actually go to sell a stock your software will ask you what price you want to sell the stock at. Often it will offer a pre-filled in price range that you might want to sell the stock at. Most people just click OK, but you can change these numbers if you want to. You can it to to ask for more, or ask for less.
In general when the price of a stock is falling there's a BUNCH of sell orders for the current price that are going unsold. It's the people who are willing to sell for less than the current price that are getting their trades completed and that's why the price keeps falling over time. Because there's more and more sellers under the current market price.
If you look at a website like this one https://www.cboe.com/us/equities/market_statistics/book/aapl/
You'll see a real time list of "bids" and "asks" for Apple Stock. The "bid" is the maximum price that a buyer is willing to pay for a share of stock. An "ask" is the minimum price that a seller is willing to take. When a bit and an ask meet at the same price, a transaction occurs and the stock is bought/sold.
Lots of people put in sells or buys at prices other than the current market price in hopes that someone desperate comes along and they can complete the transaction. But most of the time these orders just expire without a transaction ever occurring.
Miliean t1_iycxe9o wrote
Reply to ELI5: If a company is public and a person owns 75% of the shares, can they be kicked out/fired by other board members? by OrdinarilyAliveHuman
Yes and no.
The key word in your question is "public" that changes EVERYTHING. The following paragraphs assume a private company, as in you own 75% and your brother owns the remaining 25%. So a private, not public company.
There's actually 3 "roles" here. First there's your role as a shareholder. This is a person who owns a portion of the company, in this case it's 75% but some shareholders might only own .00001%. Every share you own gets you 1 vote when it comes time to elect board members.
Second there's your role as an employee of the company, normally you'd hire yourself as CEO.
Third there's the board members, and since you are 75% owner you're likely going to elect yourself chairman of the board. It's important to note here, you elect board members based on rules set out in the corporate charter (these are the rules of the company as set out when the company was founded). Every individual board election is voted on by all shareholders. SO a 75% shareholder can control every single board election, therefore 75% of the shares gets you 100% of the board seats.
So this person would be, majority shareholder, chairman of the board and CEO. 3 roles, 1 person. Each role gives you certain powers, but those powers are not unlimited.
Board members then vote on things, such as who to hire as CEO and when to fire the CEO. Since you are CEO, the board members that you elected should vote for you. BUT board members, like any elected official, does not need to vote as they have promised they will vote.
In the event that people you got elected don't vote your way, there would be a process outlined in the corporate charter on how to replace a board member, normally based on the votes of other board members. So if someone didn't vote as you'd like, you'd try to kick them out.
So to answer your question. If the board members you elect turn against you, it's likely that you can replace them but it's going to take some time. So they would have the ability to fire you, but not long term. You'd just start replacing board members who voted against you until you had enough votes to hire yourself back as CEO.
So lets pose a question. Say I own 75% of the shares and my idiot brother owns 25%. My brother is an idiot but people love him and he's extremely popular.
Over time I've elected 7 board members. Myself, as chairman. Both my parents, my 2 cousins, and a husband/wife couple that are an old family friend. SO 7 people, all voted in by me so in theory I control them... in theroy.
My super likeable brother though, he decides he wants to run the company. So he turns on the charm and gets my parents and cousins to agree to vote for him as CEO. A board meeting is called and someone puts forward a motion to fire the CEO, that's ME so I vote no and so do the family friends. But my parents and cousins vote yes. They then vote to hire my brother as CEO. My brother thinks he has won, I am furious.
So I'm no longer CEO, but I'm still board chairman and majority shareholder. Per the company rules board members are elected to 1 year terms and the elections happen at the annual general meeting, but that's not for months.
I have a few options. I could wait the few months, fire my parents and cousins from the board, appoint my wife and 3 children and then fire my CEO brother and hire myself back as CEO. Boom, problem solved but it took a few months.
But my role as chairman likely gives me some powers to address this faster. Most companies would have a process to remove a member of the board. The key here is that since I control the company I also control these rules, so as long as I had a very thoughtful lawyer when the company was founded (lets assume I did) then the chairman can likely remove any board member at any time and then appoint a temporary board member to serve until the AGM where we can properly elect someone.
So assuming I had the foresight to do that, I would use my chairman powers to fire my parents and cousins, appoint my wife and children as temporary board members to replace them, and rehire myself as CEO.
All of this would likely happen in the same meeting where I got fired as CEO.
So to answer your question, yes and no. They can be kicked out, but it's VERY difficult and likely could not happen forever.
But way back at the beginning I noted this would only be for a private company. Once a company wants to offer shares to the general public, and be listed on a stock exchange they need to agree to MANY rules and regulations.
One of those rules speaks to having an "independent" board of directors. This is why many business people, political figures and other "important" people become board members in retirement. It's not a large time commitment, you get paid, and your prior work experience is generally used to frame you as independent. Look at this link https://www.apple.com/ca/leadership/ at the bottom of the page it lists Apple's board of directors.
There's Tim Cook himself, many high level employees of other large companies. There's people from Google, Johnston & Johnston, Northrop Grumman, Boeing, BlackRock (among others). Then there's Al Gore (former VP to Clinton). So public companies "should" have independent board members. Having proper independent board members who have their own reputations outside of their job as board members. SO with board members like that, they might take a moral stand against a CEO even though that CEO is a majority shareholder.
Might, key word there is "might".
Miliean t1_iuioav7 wrote
Reply to Eli5 Government Bonds - interest rate? by Snacktapus
The bond contract states. We will pay you $100 in 5 years time, and we will also pay you $5 per year.
This is expressed as a 5% interest rate on the bond. And it appears as if the government are repaying you the $100 that they borrowed when they initially sold the bond, but that part is not entirely true.
The government simply has a contract stating that they will pay $100 in 5 years time, and $5 per year for each of those 5 years. Then they put that contract up for auction.
If they have set their interest rate correctly, the market will settle on exactly $100 as the price of that bond, but it rarely goes that well. Instead they might settle on a price of $99.99 or literally any other amount. If the market buys the bonds for less than the "face value" then the interest rate was set to low, if the market settles on a price more than face value, the interest rate was too high.
It's all a bit of a balancing act. The interest rate (the profit) balances against the initial investment (the price of the bond). This is true in both the primary market (when the government initially sells the bond) as well as the secondary market (when the bond holder sells it to someone else).
Miliean t1_iuinhms wrote
Reply to ELI5: English is spoken by nearly 10 billion people worldwide. How did this language become so widely used throughout many countries where English isn’t the official language? by ReesMedia
People who spoke English invaded and occupied large portions of the planet. At a certain point, the locals started learning the language of the invaders, and many years later here we are.
Miliean t1_iuin9ez wrote
Reply to ELI5 If the birthrate has declined by 20%, why does everything seem more crowded now? by StopCut
Say you have a population of 50 people that all live in the same town and all of them are in M/F couples (so 26 couples) and over a year every single one of them have a baby, so 26 babies.
Now you have a total town population of 76.
Now lets take that exact same town but there's 100 people living in it. Same deal, all of them are in couples, but this time only half of the couples have children (so 50 couples, 25 children) now there's a total population of 125 in the town.
The first town has a much higher birth rate, but the second town is more crowded.
Miliean t1_je5jjfd wrote
Reply to ELI5: Why is settling a case not seen as an admission of guilt? by Significant_Neat_688
You underestimate how expensive fighting can be.
Lets say that someone comes along and accuses you of a workplace sexual misconduct situation. You own the company, so there's no risk of being fired. But there's a public reputation element that could cost you customers in the long run. You know you didn't do it, but proving that is difficult. It becomes a situation where they are accusing you, and you are denying it but neither side really has a lot of evidence one way or the other.
Public opinion would be against you, and that could have negative ramifications for your career even if the accuser eventually loses in court. Court records are public, so IF it goes to court everyone is going to know what you have been accused of.
You sit down with your lawyer. They tell you that the legal fees would likely be in the $250,000 range if it goes to court. In addition you estimate that you would lose $10,000,000 in business by customers dropping you because they don't want to be associated with someone who's accused of that.
Then, if you lose, you'd likely have to pay the accuser an additional $10,000,000. So there's no scenario where if you take this to court you don't lose at least $10,250,000 but could be as much as $20,250,000.
You offer the ex employee $1,000,000 to just drop the whole thing, and they agree.