Stock

Stock is a term interchangeably used with share or equity, but it is a portion of a company or business in exchange for which companies raise funds to run.

The stocks of a company are usually traded/exchanged for money at a stock exchange where the company is listed, or the companies or businesses raise money for the first time by offering stocks by issuing an IPO (Initial Public Offering).

In finance, a stock represents a share in the ownership of a company and constitutes a claim on the part of the company’s assets and earnings. There are two main types of stock: common stock and preferred stock.

Common stock represents ownership in a company and provides the holder with voting rights and the potential to receive dividends. Shareholders of common stock are also known as equity holders. The value of a common stock is determined by the overall financial performance of the company and the general economic conditions.

Preferred stock is a type of stock that has a higher claim on assets and earnings than common stock but typically has no voting rights. Preferred stockholders are paid dividends before common stockholders and in the event of a liquidation, preferred stockholders will be paid before common stockholders. The value of the preferred stock is usually more stable than common stock and is generally considered less risky.

When a company wants to raise money, it can issue stock to the public in an initial public offering (IPO). After the IPO, the stock can be traded on a stock exchange, such as the NYSE or NASDAQ, BSE, or NSE. The price of the stock fluctuates based on supply and demand and is influenced by a variety of factors such as the company's financial performance, industry trends, and overall economic conditions.

Buying stocks is a way of investing in a company with the hope that the value of the stock will increase over time, and the investors can sell the stock at a higher price than they bought it for, resulting in a capital gain.