Stock

What does it mean?
A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.

There are two main types of stock: common and preferred. Common stock usually entitles the owner the right to vote at shareholder meetings and to receive dividends that the company has declared. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. For example, owners of preferred stock receive dividends before common shareholders and have priority in the event a company goes bankrupt and is liquidated. 

Also known as shares, or equity.

In Other Words...
A holder of stock (a shareholder) has a claim on a part of the corporation's assets and earnings. In other words, a shareholder is an owner of a company. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. For example, if a company has 1000 shares of stock outstanding, and one person owns 100 shares, that person would own and have claim to 10% of the company's assets.

Stocks are the foundation of nearly every portfolio, and they have historically outperformed most all other investments over the long run.

Related Links
Stock Basics Tutorial - If you're new to the stock market and want the basics, this is the tutorial for you!

Five Investing Pitfalls To Avoid - Common sense or common folly? Discover some approaches to circumventing typical stumbling blocks on the road to profitable investing.

Related Terms
ADR | Assets | Blue Chip | Corporation | Earnings | Equity | Penny Stock | Shareholder | Shares | Stock Option

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