What is a stock?

A stock (also known as equity) is a security that represents the ownership of a fraction of a corporation.


Having stock entitles the owner of the stock to a proportion of the corporation's assets and profits equal to how much stock they own. Having stock is often referred to as shares.


  • Corporation's issue (sell) stock to raise funds to operate their businesses. There are two main types of stock: common and preferred.

  • Stocks are bought and sold predominantly on stock exchanges, though there can be private sales as well, and they are the foundation of nearly every portfolio.

Owning stock gives you the right to vote in shareholder meetings, receive dividends (which are the company’s profits) if and when they are distributed, and it gives you the right to sell your shares to somebody else.


If you own a majority of shares, your voting power increases so that you can indirectly control the direction of a company by appointing its board of directors.



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