Stocks

A stock is type of security that represent fractional shares of ownership in a company. Stock represent equity you own in a company therefore they are also called equities. Units of stock are called shares.

There are two main types of stocks, common and preferred. 

Common stock offer to the stockholder the right to vote and receive dividends if the company offers them.

Preferred stock to do offer voting rights to the stockholder, but they receive dividends before the common stockholders. Preferred stockholders have preferred status that if the company has to file bankruptcies and has to liquidated. In other words, preferred stockholders are paid out before the common shareholders are paid out.

Companies issue stock to raise fund to 

• Pay off debt
• Launch new products or services
• Expand 

People buy stocks for the following reasons

• For capital gains
• To receive dividends
• To be able to vote

There are five way to buy stock

1. A full service broker
2. Online brokerage 
3. Mutual fund
4. Dividend reinvestment
5. Direct stock plans

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