A share (also referred to as equity shares) of stock represents a share of ownership in a corporation. A corporation is a separate legal entity usually used to conduct business
Stock typically takes the form of shares of common stock (or voting shares). A voting share (also called common stock or ordinary share) is a share of Stock giving the Stockholder the right to vote on matters 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. Preferred stock, also called preferred shares or preference shares, is typically a higher ranking stock than Voting shares, and its terms are negotiated  Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures Shares of such stock are called "convertible preferred shares" (or "convertible preference shares" in the United Kingdom).
Although there is a great deal of commonality between the stocks of different companies, each new equity issue can have legal clauses attached to it that make it dynamically different from the more general cases. Some shares of common stock may be issued without the typical voting rights being included, for instance, or some shares may have special rights unique to them and issued only to certain parties. Note that not all equity shares are the same. 
A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock. Derivatives are Financial instruments whose values depend on the value of other underlying financial instruments In finance the underlying of a derivative is an Asset, basket of assets, index, or even another derivative such that the cash flows of the Futures and options are the main types of derivatives on stocks. In Finance, a futures contract is a standardized Contract, traded on a Futures exchange, to buy or sell a certain Underlying instrument The underlying security may be a stock index or an individual firm's stock, e. A stock market index is a method of measuring a section of the Stock market. g. single-stock futures. Single-stock futures (SSF's are Futures contracts with the underlying asset being one particular stock usually in batches of 100
Stock futures are contracts where the buyer is long, i. In finance a long position in a security such as a Stock or a bond, or equivalently to be long in a security means the holder of the position owns the e. , takes on the obligation to buy on the contract maturity date, and the seller is short, i. In Finance, short selling or "shorting" is the practice of selling a Financial instrument that the seller borrows first (does not own and then e. , takes on the obligation to sell. Stock index futures are generally not delivered in the usual manner, but by cash settlement. In Finance, an equity derivative is a class of Financial instruments whose value is at least partly derived from one or more Underlying
A stock option is a class of option. Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures Specifically, a call option is the right (not obligation) to buy stock in the future at a fixed price and a put option is the right (not obligation) to sell stock in the future at a fixed price. Example of a call option on a stock Buy a call The buyer expects that the price may go up Example of a put option on a stock Buy a Put A Buyer thinks price of a stock will decrease Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. Derivatives are Financial instruments whose values depend on the value of other underlying financial instruments The most popular method of valuing stock options is the Black Scholes model. The term Black–Scholes refers to three closely related concepts The Black–Scholes model is a mathematical model of the market for an equity in which the equity's  Apart from call options granted to employees, most stock options are transferable. An employee stock option is a Call option on the common stock of a company issued as a form of non-cash compensation.
During Roman times, the empire contracted out many of its services to private groups called publicani. Ancient Rome was a Civilization that grew out of a small agricultural community founded on the Italian Peninsula as early as the 10th century BC In antiquity, publicans ( Latin publicanus (singular publicani (plural were public contractors in which role they often supplied the Shares in publicani were called "socii" (for large cooperatives) and "particulae" which were analogous to today's Over-The-Counter shares of small companies. Though the records available for this time are incomplete, Edward Chancellor states in his book Devil Take the Hindmost that there is some evidence that a speculation in these shares became increasingly widespread and that perhaps the first ever speculative bubble in "stocks" occurred. A stock market bubble is a type of Economic bubble taking place in Stock markets when price of Stocks rise and become overvalued by any measure of Stock
The first company to issue shares of stock after the Middle Ages was the Dutch East India Company in 1606. The Dutch East India Company ( Vereenigde Oost-Indische Compagnie or VOC in old-spelling Dutch, literally "United East Indian The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. Economic growth is the increase in the amount of the goods and services produced by an economy over time The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. The Netherlands ( Dutch:, ˈnedərlɑnt is the European part of the Kingdom of the Netherlands, which consists of the Netherlands the Netherlands Shipping is physical process of Transporting goods and Cargo. A superpower is a State with a leading position in the international system and the ability to Influence events and project power on a worldwide scale Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families.
Economic historians find the Dutch stock market of the 1600s particularly interesting: there is clear documentation of the use of stock futures, stock options, short selling, the use of credit to purchase shares, a speculative bubble that crashed in 1695, and a change in fashion that unfolded and reverted in time with the market (in this case it was headdresses instead of hemlines). The hemline of a garment is its lower edge The term most often refers to the lower edge of a Skirt or Dress. Dr. Edward Stringham also noted that the uses of practices such as short selling continued to occur during this time despite the government passing laws against it. This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary. 
A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. As commonly used, individual refers to a Person or to any specific object in a collection Generally a company is a form of Business organization. The precise definition varies A corporation is a separate legal entity usually used to conduct business In financial markets, a share is a Unit of account for various financial instruments including Stocks Mutual funds Limited partnerships A joint stock company (JSC is a type of business entity it is a type of Corporation or Partnership. Companies listed at the stock market are expected to strive to enhance shareholder value. A stock market, or (equity market is a private or public market for the trading of company Stock and derivatives of company Shareholder value is a business buzz term which implies that the ultimate measure of a company's success is to enrich shareholders
Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors.
Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. A corporate stakeholder is a party who affects or can be affected by the company's actions A business (also called firm or an enterprise) is a legally recognized organizational entity designed to provide goods and/or services to A non-profit organization ( abbreviated "NPO" also "not-for-profit" is a legally constituted Organization whose objective is to support or engage Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. A volunteer is someone who works for a community or for the benefit of environment primarily because they choose to do so A voluntary association or union (also sometimes called a voluntary organization, unincorporated association, or just an association) is a group
Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. fiduciary duty is a legal relationship of confidence or trust between two or more parties most commonly a fiduciary or Trustee and a principal
However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders. California ( is a US state on the West Coast of the United States, along the Pacific Ocean. The United States of America —commonly referred to as the 
The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds. An exchange-traded fund (or ETF) is an investment vehicle traded on Stock exchanges much like Stocks.
The owners of a company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use.
By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends. Dividends are payments made by a Corporation to its Shareholder members
In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company.
In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted - effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company.
Although ownership of 51% of shares does result in 51% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.
In most countries, including the United States, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. The United States of America —commonly referred to as the Management (covering theory practice and scope of management and Manager' (covering the people who manage might help clarify and systematise fiduciary duty is a legal relationship of confidence or trust between two or more parties most commonly a fiduciary or Trustee and a principal Nonetheless, as Martin Whitman writes:
Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can elect a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held and voted by insiders.
Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. However, all money obtained by converting assets into cash will be used to repay loans and other debts first, so that shareholders cannot receive any money unless and until creditors have been paid (most often the shareholders end up with nothing).
Financing a company through the sale of stock in a company is known as equity financing. In accounting terms after all liabilities are paid ownership equity is the remaining interest in Assets If valuations placed on assets do not exceed liabilities Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Debt is that which is owed usually referencing Assets owed but the term can cover other obligations In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest Unofficial financing known as trade financing usually provides the major part of a company's working capital (day-to-day operational needs). Working capital, also known as net working capital, is a financial metric which represents operating liquidity available to a business Trade financing is provided by vendors and suppliers who sell their products to the company at short-term, unsecured credit terms, usually 30 days. Equity and debt financing are usually used for longer-term investment projects such as investments in a new factory or a new foreign market. Customer provided financing exists when a customer pays for services before they are delivered, e. g. subscriptions and insurance.
A stock exchange is an organization that provides a marketplace for either physical or virtual trading shares, bonds and warrants and other financial products where investors (represented by stock brokers) may buy and sell shares of a wide range of companies. A stock exchange, share market or bourse is a Corporation or Mutual organization which provides "trading" facilities for Stock A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through Market makers or A company will usually list its shares by meeting and maintaining the listing requirements of a particular stock exchange. A stock exchange, share market or bourse is a Corporation or Mutual organization which provides "trading" facilities for Stock In the United States, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new so-called ECNs (Electronic Communication Networks like Archipelago or Instinet). An electronic communication network ( ECN) is the term used in financial circles for a type of computer system that facilitates trading of financial products outside of
In the USA stocks used to be broadly grouped into NYSE-listed and NASDAQ-listed stocks. Until a few years ago there was a law that NYSE listed stocks were not allowed to be listed on the NASDAQ or vice versa.
Many large non-U. S companies choose to list on a U. S. exchange as well as an exchange in their home country in order to broaden their investor base. These companies have then to ship a certain amount of shares to a bank in the US (a certain percentage of their principal) and put it in the safe of the bank. Then the bank where they deposited the shares can issue a certain amount of so-called American Depositary Shares, short ADS (singular). If someone buys now a certain amount of ADSs the bank where the shares are deposited issues an American Depository Receipt (ADR) for the buyer of the ADSs. An American Depositary Receipt (or ADR represents the ownership in the shares of a foreign company trading on US financial markets
Likewise, many large U. S. companies list themselves at foreign exchanges to raise capital abroad.
Although it makes sense for some companies to raise capital by offering stock on more than one exchange, a keen investor with access to information about such discrepancies could invest in expectation of their eventual convergence, known as an arbitrage trade. In Economics and Finance, arbitrage is the practice of taking advantage of a price differential between two or more Markets striking a combination of matching In today's era of electronic trading, these discrepancies, if they exist, are both shorter-lived and more quickly acted upon. Electronic trading, sometimes called etrading, is a method of trading securities (such as Stocks and bonds, foreign Currency, and As such, arbitrage opportunities disappear quickly due to the efficient nature of the market.
There are various methods of buying and financing stocks. The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated The most common means is through a stock broker. A stock broker or stockbroker is a qualified and regulated professional who buys and sells shares and other securities through Market makers or Whether they are a full service or discount broker, they arrange the transfer of stock from a seller to a buyer. Full service is a term that has many different uses In general the term implies that the customer will receive as much service as is reasonably possible Discounts and allowancesIn Finance and Economics, discounting is the process of finding the present value of an amount of cash at some future date and along with Most trades are actually done through brokers listed with a stock exchange, such as the New York Stock Exchange. The New York Stock Exchange ( NYSE) is a Stock exchange based in New York City.
There are many different stock brokers from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a full service or discount broker. A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A credit union is a Cooperative Financial institution that is owned and controlled by its members and operated for the purpose of promoting thrift providing credit
There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. Investor Relations (IR is a strategic management responsibility that integrates finance communication marketing and securities law compliance to enable the most effective two-way communication However, the initial share of stock in the company will have to be obtained through a regular stock broker. Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of brokers. Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first
When it comes to financing a purchase of stocks there are two ways: purchasing stock with money that is currently in the buyer's ownership, or by buying stock on margin. The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In finance a margin is collateral that the holder of a position in securities, options, or Futures contracts has to deposit to cover Buying stock on margin means buying stock with money borrowed against the stocks in the same account. In finance a margin is collateral that the holder of a position in securities, options, or Futures contracts has to deposit to cover These stocks, or collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock (collateral) to repay the borrowed money. In lending agreements collateral is a borrower's asset that is Forfeited to the lender if the borrower is insolvent—that is unable to pay back the principal and interest on A loan is a type of Debt. This article focuses exclusively on monetary loans although in practice any material object might be lent He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account. A share price is the price of a single share of a company's Stock. In finance a margin is collateral that the holder of a position in securities, options, or Futures contracts has to deposit to cover Buying on margin works the same way as borrowing money to buy a car or a house, using the car or house as collateral. Moreover, borrowing is not free; the broker usually charges 8-10% interest.
Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order (short selling); although a number of reasons may induce an investor to sell at a loss, e. In Finance, short selling or "shorting" is the practice of selling a Financial instrument that the seller borrows first (does not own and then g. , to avoid further loss.
As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction.
After the transaction has been made, the seller is then entitled to all of the money. An important part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis.
The price of a stock fluctuates fundamentally due to the theory of supply and demand. Supply and demand is an Economic model describing effects on price and quantity in a Market. Like all commodities in the market, the price of a stock is directly proportional to the demand. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information However, there are many factors on the basis of which the demand for a particular stock may increase or decrease. These factors are studied using methods of fundamental analysis and technical analysis to predict the changes in the stock price. Fundamental analysis of a business involves analyzing its Financial statements and health its management and competitive advantages and its Competitors and Technical analysis is a Financial markets technique that claims the ability to forecast the future direction of security prices through the study of past market A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly correlated to the stock market value. The American Customer Satisfaction Index ( ACSI) is an economic indicator that measures the satisfaction of consumers across the U Stock price is also changed based on the forecast for the company and whether their profits are expected to increase or decrease.