By Natasha
A stock is a general
term used to describe the ownership certificates of any company. A share refers
to the stock certificate of a particular company, holding a company’s share
makes you a shareholder. There are two types of stocks: 1. Common stock: common
stock is shares entitling their holder to dividends that vary in amount and may
even be missed, depending on the fortunes of the company. The main reason
people invest in common stock is for capital appreciation. They want their
money to grow in value over time. An investor in common stock hopes to buy the
stock at a low price and sell it at a higher price at some point in the future.
2. Preferred stock: preferred stock is a stock that entitles the shareholder to
a fixed dividend whose payment takes priority over that of common stock
dividends. Preferred shareholders are legally entitled to receive a certain
level of dividend payments before any dividends can be issued to other
shareholders who have a common stock. There is also something like preferred
stock that is called convertible preferred stock. This is basically a preferred
stock with an option of converting into a fixed number of common shares,
usually any time after a predetermined date. The stock market is a very
important part of the economy of a country because it issues shares for the
investors to invest in the stocks a company needs to get listed to a stocks
exchange and through the primary market of the stock exchange they can issue
the shares and get the funds for business requirements. Stocks offer the most
potential for growth. American stocks have consistently earned more than bonds
over the long term, despite regular ups and downs of the market. That’s why
investing in in stocks, exchange traded funds (ETF), or stock mutual funds is
important when saving for retirement or other far-off goals you need money for.
Stocks: https://www.investopedia.com/university/stocks/stocks1.asp https://www.investopedia.com/terms/s/stockmarket.asp
