<prompt> Human: 1. When a stock loses its value, what causes that?2. Who sets the value of each stocks?3.Why are there different types of stockspenny stocks, Blue chip etc why arent they all just categorized as one kind of stock4. In a crash like 2008, are all of the stocks loosing value at the same time, or does it have to do with how powerfulweak the dollar has become?5. Futures and options, and why they are a goodbad investment?Thanks a million to anyone who can help with these, sorry if they are stupid, Im just trying to figure out how the stock market works, Im only 19 so I dont know all that much.  <response>: 1. A stock is valued based on its last trade. The value of a stock changes as its being traded at a higher or lower value. Lets say I have 100 shares of stock XYZ. Im offering them for sale for 50 a share. Someone is willing to buy them also for 50 a share, so the sale is made, and thats the current value of XYZ. However, tomorrow, something happens, and nobody is willing to buy for 50 a share. The most someone is offering is 45. So I have to lower my asking price in order to sell my shares. So I lower my asking price to 45, and now the sale is made. And officially, stock XYZ has just lost value.2. The value of stocks is decided by the collective group of all investors in the world, following the practice I just described.3. All the types of stocks you mentioned are indeed one type of stock. Its just the way that some people classify. You might look at houses and call some houses cheap, some houses expensive, some houses nice, some ugly. These arent clear-cut definitions, but they help in describing houses. Likewise, generally, people call stocks that trade under 1 a share penny stocks. People call the stocks of large diverse companies blue chips. People call stocks that pay dividends dividend stocks. This just help in knowing what were talking about. 4. Generally, all stocks will lose value, but this isnt necessarily true. I remember reading that in the 2008 crash, the only two stocks that rose in value were Walmart and McDonalds. People can always find value in a particular company even in a general market crash. 5. Futures and options arent investments. But they are trading tools to help you with your particular investment needs. An option is a contract to buy or sell at a future date. Lets say you are an airline, and you need a constant supply of fuel. You dont want to be concerned about the daily fluctuations in fuel prices. You can purchase fuel options for future dates to buy the fuel at a specific price. These options do cost money, but they can help smooth out your balance sheet. And if the price of fuel skyrockets, you luck out and can exercise those options to buy fuel at the previously agreed price. Another use of options is to protect your investment. If you buy 100 shares of XYZ for 50, and youre afraid they will crash, you can buy put options that will guarantee you can sell for 50 anytime this next year. So if XYZ goes bankrupt, it doesnt matter; you can still exercise your options to sell for 50. However, once again, these options do cost money, so nothing is free. Thats the brief overview of options, although theres a whole lot more. 