What are Stocks?

A stock is simply a share in the ownership of a firm. Basically, it represents a claim of assets and earnings from the company. The more stocks you acquire, the greater your ownership stake in the company. A shares, equity, or stock is all the same.

Being an Owner

You are regarded as an owner or a shareholder of a firm if you are holding a company’s stock. As a shareholder, you have a claim to every asset of the company. Basically, you own a small amount of every piece of furniture, every trademark, and contract of the company. Moreover, you are also entitled to your share of the earnings of the firm as any voting rights are next to the stock.

Stock Certificate

A stock is represented by a stock certificate. This fancy piece of paper serves as proof that you own the stock. With the recent technological advancements, this document is seldom seen as it is kept electronically and is well-known as holding shares “in street name”. This is settled in order to have easier trades of the share. Before, if a person desires to sell shares, the certificates are taken down on the brokerage. Now, technology makes trading easier and faster with just one click.

As a shareholder of a firm, it doesn’t demand you to provide a say in the day-to-day operations of the business. Instead, you are allowed to participate in important decisions, such as the election of the board of directors. To elect the board, it only requires one vote per share during annual meetings. There is a certain extent by which you can give a say in the company. For example, being a shareholder of Microsoft doesn’t necessarily mean you can talk directly to Bill Gates and tell your insights on how the business should run.

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