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What is a Stock?

April 20
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Stock is a type of security that claims ownership in a company and represents a claim on its proportional share in the corporation's assets and profits. (Also called as “shares”, “security”, ”equity” ) There are classified into two main types: common stock and preferred stock. Common stock usually gives the owner right to vote at shareholders' meetings. Preferred stock usually does not have voting rights, but has a higher claim on assets and earnings. This means owners of preferred stock legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders also have priority in the event that a company goes bankrupt and is liquidated. Shareholder or stockholder owns part of the corporation's assets and earnings. Ownership in the company is determined by the number of shares a person owns divided by the total number of shares outstanding. For example, if a company has 1000 shares of stock outstanding and a person owns 50 of them, then he/she owns 5% of the company.

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