Stock
A stock, also known as a share or equity, represents ownership in a company. When you buy a stock, you essentially own a small piece of that company. Companies issue stocks to raise capital for various purposes, and investors purchase these stocks as a means of acquiring ownership and participating in the company's potential success.
Stocks are traded on stock exchanges, such as the New York Stock Exchange (NYSE) or the NASDAQ. The value of a stock can fluctuate based on the company's performance, market conditions, and various other factors.
There are two main types of stocks:
- Common Stock: This type of stock typically comes with voting rights at shareholders' meetings. Common stockholders may receive dividends, but these are not guaranteed.
- Preferred Stock: Preferred stockholders have a higher claim on company assets and earnings compared to common stockholders. They usually receive fixed dividends, but they often do not have voting rights.
Investors buy and sell stocks through brokerage accounts, and the stock market serves as a platform for these transactions. Stock investing carries risks, but it also offers the potential for capital appreciation and income through dividends.
