Stock is simply a share in the ownership of a compnay. The more stokcs you acquire the greater your ownership stake becomes in a company. It simply represents claim on the company's assets and earnings.
Common alternate words in use are : shares,'equity, stocks etc.
If you own a share of a company, you are one of those owners ( shareholders) of the company who have a claim to every tiny piece of the property that the company owns.
Earnings given to shareholders are called as Dividends.
Generally, a piece of paper, called as Stock Certificate, is issued which is the proof of your ownership. However, in electronic wold, one can have a Demat account in which everything is done electrocinally - strtictly speaking, online by clicks!
As a shareholder, you are entitiled to some portion of the profit and loss of the company and have a claim on assets but you don't get control over how company policies and it's day to day decisions for running the business. You can only elect board of directos as a shareholder :-)
Few important points on shares and stocks :
- The more share you have, the more profit you get. If liquidations happen, all the creditors will be paid and then only you will be able to claim on assets.
- As a share holder, you will never be personally held liable if company goes bankrupt and is not able to pay debts. You will never lose your personal assets even if the company goes bankrupt.
- The maximum you will lose on bankrupt of a company is the share you own, nothing else.
'
