|The word stock translates as a share of ownership within a company. Shares allow a claim on the assets and earnings of a company. The more shares you have, the higher stake and more say you have. Holding stock within a company makes you a shareholder. Your investment helps the company with expansion, growth and development.
|A market is where things can be bought and sold, however, a stock market is where company shares may be bought and sold. The place or institution from where they are bought and sold is called an Exchange.|
|Common stock or Ordinary shares gives voting rights to the shareholders, at the rate of one vote per share. These votes can be used to elect the members of the board of directors of that company. Common shares do have a disadvantage, shareholders do not receive any money until after creditors, bondholders and preferred shareholders receive their monies.
|Preferred stock or shares take priority over common stocks when dividends and assets are distributed. Although preferred stock comes with some degree of ownership, shareholders do not get voting rights. If you are looking for a guaranteed fixed dividend forever, preferred shares are the way to go.|
|Companies issue shares so that they are able to invest in their own business. Once issued that can be bought and sold on the stock market. At a later date, Companies may decide to release more shares to allow them to expand; this is termed as a Rights issue. The principle feature of the stock market is to match buyer and seller, they are governed by the economic laws of supply and demand, and with this in mind all like companies such as banks or technology institutions are grouped together.|
|Stocks are traded in two different ways, both on exchanges. However, some exchanges are at a physical location and all trading is done on the trading floor whilst others are virtual and composed of a number of computers and all trades are completed electronically. In either circumstance you must understand that when trading company stocks, the trade does not directly involve the company.|