Stocks - Page 78

Stocks represent ownership shares in a company. When an individual purchases stocks, they acquire a small portion of that company, becoming a shareholder. Stocks are typically bought and sold on stock exchanges, and their prices can fluctuate based on supply and demand, company performance, and broader economic factors.There are two main types of stocks: common stocks and preferred stocks. Common stocks generally allow shareholders to vote on company matters and may provide dividends, which are a share of the company's profits distributed to shareholders. Preferred stocks typically do not offer voting rights but generally provide fixed dividends and have a higher claim on assets than common stocks in the event of liquidation.Investing in stocks can provide opportunities for capital gains (profits from selling shares at a higher price than the purchase price) and income through dividends. However, stock investments carry risks, including the potential loss of part or all of the investment if the company underperforms or faces financial difficulties. Overall, stocks are a key component of financial markets and a popular method for individuals and institutions to invest and build wealth over time.