Definition
A stock (also known as equity) represents a share in the ownership of a company. When you purchase a company's stock, you're buying a small piece of that company, called a share.
Stock
A stock (also known as equity) represents a share in the ownership of a company. When you purchase a company's stock, you're buying a small piece of that company, called a share.
Key Characteristics
- Ownership: Stockholders own a part of the company and may have voting rights
- Limited Liability: Shareholders are not personally liable for the company's debts
- Potential Returns: Stocks can provide returns through price appreciation and dividends
- Risk: Stock prices can be volatile and fluctuate based on various factors
Types of Stock
- Common Stock: Provides voting rights but lower priority for dividends and liquidation
- Preferred Stock: Often has no voting rights but higher priority for dividends and liquidation
How Stocks Are Traded
Stocks are primarily traded on exchanges like the New York Stock Exchange (NYSE) or Nasdaq. They can also be traded over-the-counter (OTC) for companies not listed on formal exchanges.
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