What is a stock/share?

In a nutshell

A stock is a unit of ownership in a company, also known as a share or equity. When you buy a share of stock, you purchase partial ownership in a company, entitling you to certain benefits:

• Voting rights. You may gain voting rights at a company’s annual shareholder meetings.
• Income: You may receive a share of the company’s profits in the form of dividend payments
• Capital appreciation. When the company’s stock price goes up, your shares increase in value.

Companies raise capital by selling shares of their stock. Stocks can be bought and sold privately or on the stock market.

Types of stock

Preferred stock

• Generally don’t get voting rights.
• Given preference to receive dividend payments before common stockholders.

Common stock

• A single share gives you a single vote.
• Less preference to receive dividend payments than common stockholders.