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What is stock?

To raise money, companies divide themselves into pieces and sell these pieces, called shares of stock, to investors. Each share of stock is entitled to a proportional cut of the profits or losses the company generates from its daily operations.

Why Do Stock Prices Fluctuate? Answer: The stock market is essentially a giant auction - only instead of antiques and heirlooms, it's ownership in businesses that's up for grabs. Stocks are traded at places called exchanges. At these exchanges, traders buy and sell shares of companies. Generally, the price of a stock is determined by supply and demand. For example, if there are more people wanting to buy a stock than to sell it, the price will be driven up because those shares are rarer and people will pay a higher price for them. On the other hand, if there are a lot of shares for sale and no one is interested in buying them, the price will quickly fall. Because of this, the market can appear to fluctuate widely. Even if there is nothing wrong with a company, a large shareholder who is trying to sell millions of shares at a time can drive the price of the stock down, simply because there are not enough people interested in buying the stock he is trying to sell. Because there is no real demand for the company he is selling, he is forced to accept a lower price.

Types of stock
Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.[

Stock derivatives
For more details on this topic, see equity derivative. A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm's stock, e.g. single-stock futures. Stock futures are contracts where the buyer is long, i.e., takes on the obligation to buy on the contract maturity date, and the seller is short, i.e., takes on the obligation to sell. Stock index futures are generally not delivered in the usual manner, but by cash settlement.

A stock option is a class of option. Specifically, a call option is the right (not obligation) to buy stock in the future at a fixed price and a put option is the right (not obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black Scholes model.[6] Apart from call options granted to employees, most stock options are transferable.

Shareholder

Stock certificate for ten shares of the Baltimore and Ohio Railroad Company Main article: Shareholder A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Both private and public traded companies have shareholders. Companies listed at the stock market are expected to strive to enhance shareholder value. Shareholders are granted special privileges depending on the class of stock, including the right to vote on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors. Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.[12][13]

The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and, especially, passively managed exchange-traded funds

What is a stock?
A stock is an ownership share in a corporation. [1] Each of these shares denotes a part ownership for a shareowner, stockholder, or shareholder, of that company. Stocks are traded on exchanges all over the world, the largest is the New York Stock Exchange or NYSE. Stocks are identified by their ticker symbol. For example, General Electric is identified as GE. Investors can buy a share in companies, or a share of a diversified global portfolio of stocks. Individual Investors can purchase shares for themselves, at a brokerage of their choice, or direct from the company, wherever they have an account set up. There are different types of shares, common, preferred and unlisted. Most shareholders purchase common stock. The goal is for capital appreciation, as well as income from interest, and dividends, so the investor can have a profit that beats monies in Treasury bills or beats inflation. Over time, stocks have outperformed cash and bonds; this takes into account depressions, world wars, and other world changing events. Stocks automatically adjust for the inflation of the currencies. 14c Stocks were instruments of punishment. [2] The original Stock Market was a fish and meat market in the City of London on or near the later site of Mansion House, so called perhaps because it occupied the site of a former stocks. Stocks "subscribed capital of a corporation" is from 1610s, Place where securities are bought and sold 1809. [3] 12c Markets were a place to meet at a fixed time for buying and selling livestock and provisions, to trade, deal in, buy, wares, merchandise, public building or space where markets are held" first attested mid-13c. Sense of "sales, as controlled by supply and demand" is from 1680s, market research is from 1926. [4] Stock exchange is attested from 1773. [5] common stolk is one of the three ones ==Preferred stock== edit meave no voting rights. The price of preferred stock in a company will usually stock, a reflection of its different rights and privileges. Preferred stock can either be cumulative or noncumulative. A cumulative preferred stock requires that if a company fails to pay any dividend or any period, which can be quarterly, semiannually, or annually. When a dividend is not declared in time it is said that the dividend has "passed" and all passed dividends on a cumulative stock is a dividend in arrears. A feature is known as a noncumulative or straight preferred stock and any dividends passed are lost forever if not declared.

Unlisted stock

Unlisted stocks are not listed on any stock exchange and may be common, or preferred. They are purchased in direct placements from the issuer of the stocks, or in the secondary market. The nature of a trading market in non-listed securities cannot be predicted. However, such stocks sometimes carry higher yields, or greater protection, than would be typically available for publicly offered stocks of the same type. On the other hand, non-publicly traded stocks are sometimes subject to restrictions on resale and the market for their resale is less liquid than for publicly traded stocks. There is no active market in non-listed stocks. [
The Definition of Market Capitalization Put simply, market capitalization is the amount of money it would cost if you were to buy every single share of stock a company had issued at the current market price. For instance, The Coca-Cola Company has 2,317,441,658 shares of stock outstanding and the stock closed at $49.60 per share. If you wanted to buy every single share of Coca-Cola stock in the world, it would cost you 2,317,441,658 shares x $49.60 = $114,945,106,236.80. Thats just shy of $115 billion. On Wall Street, people would refer to Coca-Colas market capitalization as $115 billion.

Why is market capitalization such an important concept? It allows investors to understand the relative size of one company versus another. AutoZone, a retailer of auto parts, trades at $150.31 per share. Yet, the companys market capitalization is only $8 billion. Despite having a stock price 3x higher than Coke, AutoZone is actually only 6.9% the size of the soft drink giant! This is why I wrote How to Think About Share Price. In that article, you learned that its possible for a $300 stock to be cheaper than a $10 stock.

What is stock market? A stock market which is also known as equity market is a public body in which a free network of economic transactions occurs. It is not a physical facility or secret body. It is the place for the trading of stock or shares of company and its derivatives at an agreeable price. These shares and derivatives are securities that are listed on a stock exchange.

Definition of 'Stock Market'

The market in which shares are issued and traded either through exchanges or over-the-counter markets. Also known as the equity market, it is one of the most vital areas of a market economy as it provides companies with access to capital and investors with a slice of ownership in the company and the potential of gains based on the company's future performance.

Investopedia explains 'Stock Market'


This market can be split into two main sections: the primary and secondary market. The primary market is where new issues are first offered, with any subsequent trading going on in the secondary market.

Definition of 'Initial Public Offering - IPO'


The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market. Also referred to as a "public offering".

Investopedia explains 'Initial Public Offering - IPO'


IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future because there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, which are subject to additional uncertainty regarding their future values.

The Components of the Stock Market

Stocks are risky but generally reward long-term investment.

Learning about the components of the stock market helps investors understand the market's many uses. One of the most important uses of the stock market is to provide large companies with a way to raise capital in exchange for a portion of company ownership. The aggregate effect is that millions of investors help finance economic development as businesses expand and stock appreciates in value. Arguably, understanding how each component works in this process is important.

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