Stock
A unit of ownership in a company. Buy stock and you own a slice of the business, with rights to a share of earnings and assets.
A stock represents an ownership stake in a corporation. Companies issue stock to raise capital; investors buy it hoping the company grows and their shares appreciate in value.
There are two main types: common stock gives voting rights and variable dividends, while preferred stock typically offers fixed dividends and priority in liquidation but limited voting rights.
Stock prices fluctuate continuously during trading hours based on supply and demand, which is driven by earnings reports, macro data, news, and sentiment.
Example
Apple (AAPL) has roughly 15.4 billion shares outstanding. If the stock trades at $200, the company's total market value is about $3.08 trillion — each share represents a 1-in-15.4-billion slice of that.
Related Terms
Blue-Chip Stock
Shares of a large, well-established company with a long track record of stable earnings and often consistent dividends.
BeginnerDividend
A cash (or stock) payment a company makes to shareholders from its profits, typically on a quarterly schedule.
BeginnerEquity
Ownership value in an asset after all debts are subtracted. In markets, "equity" usually means stocks.
BeginnerMarket Capitalization
The total market value of a company's outstanding shares. Market Cap = Share Price × Shares Outstanding.
BeginnerPenny Stock
Stocks trading below $5 per share, often in tiny companies. Highly speculative, illiquid, and prone to manipulation.
BeginnerSecurity
A tradable financial instrument — stocks, bonds, options, and ETFs are all securities. If it trades on an exchange, it is a security.
BeginnerShare
One indivisible unit of ownership in a company. Your ownership percentage equals your shares divided by total shares outstanding.
Beginner