Stock Basics
The initial step that you have to take to know the stock market is to know stock basics.
A share of stock refers to a unit of proprietorship in a company. If you possess a share of the stock of a particular company, you become a partial owner of that company.
If you are a shareholder, then you can enjoy the right to vote for selecting the members of the board of directors. You can also vote for other crucial affairs of the company. When the company allocates profits or dividends to its shareholders, you would also be entitled to get a fair share.
One of the exclusive attributes of stock ownership is the concept of limited liability. In case the company gets defeated in a legal suit and has to pay a big judgment, the worst thing that can occur is your stock becomes valueless. The creditors cannot seize your personal properties. However, this is not the case for privately-held corporations.
Investing in stocks has become a preferred option for a number of investors. Stock market investments account for a considerable portion of global investment.
Basically, there are two forms of stock:
- Common stock
- Preferred stock
Majority of stocks owned by investors is common stock.
Common stock
The majority of stocks owned by the common people are represented by common stocks. Common stock owners enjoy voting rights together with the right to receive dividends. Whenever you come across anything that says stock prices are up or down, it denotes common stock at all times.
Preferred stock
In spite of its name, a preferred stock enjoys lesser rights as compared to a common stock other than one vital domain – dividends. Preferred stockholders have a priority to receive dividends over common stockholders and the amount of dividend payable to them remains uniform.
Investors purchase preferred stock for earning continuously from dividends. Therefore, you should go for companies which earn substantial profits and issue preferred stock to yield a portion of their profits by way of dividends. Liquidity
One more advantage of common stocks is that they primarily have high liquidity. Small-scale and/or unknown companies might not be involved in trading so often, however, the majority of bigger companies do trading on a daily basis and generate chances for buying or selling shares.
Stock markets help you buy or sell shares of all the publicly-traded corporations on any day when the stock markets are operating.
Related Resources:
Indian Stock Market – Read about stock related information from this site.
Australian Stocks Blog – Australia Stock market Best picks, tips Hot stock punts and company Information for the latest stock market stocks for Australia , Hang seng , India stock exchange and china.