What is the difference between stocks and shares?
The stock of a company is sold in units called shares. A share is a unit of ownership, or, in a company or a corporation. Shares are one of the most traded .
If you buy a share of a company, you are buying a piece of the company. When you own more than one share in a company or several companies, these are called stocks, because "stock" generally refers to a portfolio of shares.
On the stock markets, shares are also referred to as equities — if you see the term "equities trading", it is exactly the same as share trading.
The person who buys shares in a company is called aand has a claim on part of the corporation's and earnings.
Companies divide their capital into equal units and sell these on the stock market as a means of raising capital for its expansion, rather than borrowing the funds from the banks.
Stocks and shares are traded in variousall over the world.
How a shareholder benefits
There are two main types of share:
- Preferred stock
- Common stock
Say you buy 10 shares at $10 each from company A — you have invested $100 into the company. If the value of the company increases by 10%, your shares will also increase by 10%, so they will then be worth $110. If the company value decreases, the value of your shares will also decrease.
Shareholders can earn a profit by reselling the shares at a higher price than they paid for them. For example, if company A's shares rise in value to $12 each then your $100 worth of stock is now worth $120 — if you sell, you make a profit of $20 minus anyor taxes you may be liable for.
Shareholders can also make money by holding onto the shares and receivingas the company prospers. This is usually a long-term strategy for .
Voting means the right to influence the decisions of a company. Holders of preferred stock do not usually have the right to vote, but do have a higher claim on assets and earnings above holders of common stock, for example, receiving dividends before them. They also have a higher priority in case of bankruptcy.
Holders of common stock are entitled to vote at shareholders' meetings as well as to receive dividends.
Voting rights give shareholders a say in how the company is run by voting on certain decisions. Not every company offers this option. Voting usually takes place at a company's annual general meeting.
Trading and discussing stocks and shares
Manyoffer the option to trade stocks and shares. If you are new to trading, we recommend you to start here:
We also have a dedicated forum on the stock markets:
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