Basics of Stocks

Stocks represent ownership in a company. When you buy a stock, you become a shareholder — meaning you own a piece of that business. Companies issue stocks to raise money, and investors buy them hoping the value will grow or to receive dividends.

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What is a Stock?

A stock is a unit of ownership in a company. If a company has 1,000 shares and you own 10, you own 1% of the company.

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Why Do Companies Issue Stocks?

Companies sell shares to raise capital for growth, expansion, or new projects. This allows them to fund innovation without taking on debt.

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How Do Investors Profit?

• Capital gains: Selling a stock at a higher price than you bought it.
• Dividends: Regular payments from company profits.
• Voting rights: Influence over company decisions (for common stockholders).

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Types of Stocks

• Common stock: Voting rights + dividends.
• Preferred stock: Higher claim on assets/dividends, but usually no voting rights.

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