What is a Stock?

Stock

What is a Stock?

A Stock (also known as Equity) is a security that represents the ownership of a fraction of a corporation. This entitles the owner of the stock to a proportion of the corporation's assets and profits equal to how much stock they own. Units of stock are called "Shares".

Stocks are of two types:

• Common
• Preferred

Common Stockholders:

Common Stockholders have the right to receive dividends and vote in shareholder meetings, while preferred shareholders have limited or no voting rights. 

Preferred stockholders:

Preferred Stockholders typically receive higher dividend payouts, and in the event of a liquidation, a greater claim on assets than common stockholders.

How to buy a Stock?

In general, Stocks are bought and sold on Stock Exchanges, such as the National Stock Exchange of India (NSE) or Bombay Stock Exchange (BSE). 

After a company goes public through an Initial Public Offering (IPO), their stock becomes available for investors to buy and sell on an exchange. Typically, investors will use a brokerage account to purchase stock on the exchange, which will list the purchasing price (the bid) or the selling price (the offer). 

Therefore, the price of the stock is influenced by supply and demand factors in the market, among other variables.

Stocks are purchased through the brokerage companies such as Zerodha.