Stock is any fractional amount of the consolidated capital of a company. It is a general term used to describe the ownership certificates of any company. It is a security that represents the ownership of a fraction of a corporation. It is a type of investment that represents an ownership share in a company. Investors buy stocks that they think will go up in value over time.
Having no distinctive number, it can be bought in any quantities. This entitles the owner of the stock to a proportion of the corporation’s assets and profits equal to how much stock they own. It also means goods in stores kept for sale and raw materials from which anything is made. Stocks are bought and sold predominantly on stock exchanges, though there can be private sales as well, and are the foundations of many individual investors’ portfolios. For investors, stocks are a way to grow their money and outpace inflation over time. When you own stock in a company, you are called a shareholder because you share in the company’s profits.
A stock is a form of security that indicates the holder has proportionate ownership in the issuing corporation. When you purchase a company’s stock, you’re purchasing a small piece of that company, called a share. Stocks are of two types—common and preferred. The difference is while the holder of the former has voting rights that can be exercised in corporate decisions, the later doesn’t. Common stock is, well, common. When people talk about stocks in general they are most likely referring to this type. In fact, the majority of stock issued is in this form. However, preferred shareholders are legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Preferred stock represents some degree of ownership in a company but usually doesn’t come with the same voting rights. Common and preferred are the two main forms of stock; however, it’s also possible for companies to customize different classes of stock in any way they want. The most common reason for this is the company wanting the voting power to remain with a certain group; hence, different classes of shares are given different voting rights.
Stock investors earn money in two main ways:
- If the price of a stock goes up during the time they own it, and they sell it for more than they paid for it.
- Through dividends. Dividends are regular payments to shareholders. Not all stocks pay dividends, but those that do typically do so on a quarterly basis.
