what is stock

A stock is a security that represents a fractional ownership in a company. When you buy a companys stock, youre purchasing a small piece of that company, called a share. Stocks are bought and sold predominantly on stock exchanges and are the foundation of many individual investors portfolios. A single share of the stock means fractional ownership of the corporation in proportion to the total number of shares. Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. When you own stock in a company, you are called a shareholder because you share in the companys profits. Public companies sell their stock through a stock market exchange, like the Nasdaq or the New York Stock Exchange. Investing in stock offers no guarantee that you will make money, and many investors lose money instead.