What is a Share of Stock?

Corporations issue stock for a good reason. It is not just a way to help you make money, but it is a way to help them make money as well. Of course, when you continue to buy and sell stock, they don't make profit from it, but they do make profit from the initial sale.

When a corporation needs money to grow their company and they can't or don't want to get it from bonds or other debt, they will issue stock instead. They may issue an initial amount and then issue more throughout time. They sell shares of stock at a price and use that money as profit. They then keep the stock that is outstanding on their books as equity.

The people who buy the stocks them become shareholders. It is sort of like a small business where the owner will put money into the company and then that money is referred to as equity. In a corporation, the shareholders put money into the company by buying shares of stock and then that money is referred to as equity. That is why as a shareholder you are part owner of the company.

If you hold onto the stock, you could be paid dividends if they decide to pay out dividends from their profit, and you are able to vote for certain things within the company. Or, you could decide to sell the stock for a profit which is referred to as capital gains. For example, if you sell a share of stock at $20 that you bought for $15 you have made a capital gain of five dollars.

Are you looking for more information about stocks for beginners or investments for beginners as a whole? We may be able to help you out