Stocks! After learning about the stock market, and why you should invest you must be wondering, what is a stock?
A security is a tradable financial asset.
A stock is a tradable security that represents ownership of a particular company
The owner is entitled to a proportionate share of the corporation’s assets and profits, depending on how much stock they own
Singular units of stocks are known as shares.
Stocks are traded on a stock exchange. Companies sell stocks to fund their business and raise capital. The shareholder owns a portion of the company, proportional to the outstanding shares
Outstanding shares: All the shares held by the companies investors
If a company has 10 shares of stock and an individual has 1 share, they have a claim to 10% of the company’s earnings and assets.
Note: Owning shares does not mean you own a portion of the company. Shareholders cannot do as they please with the corporations’ assets.Rather, shareholders can participate in shareholder meetings, and receive dividends
Many stocks do not give dividends. Rather, they reinvest profits into the business, which generally increases growth.
Previously, there used to be physical documents stating that a particular person owns a number of stocks. This is called a share certificate.
Nowadays, this has been phased out, and all proof of ownership is stored online
Another few resources that can help you understand the world of stocks can be found below
