What is Stock?

Also known as “shares” or “equity,” stock is a type of security issued by corporations to raise capital that entitles stock owners (shareholders) to partial ownership of the corporation. Most stocks are bought and sold on what is called an exchange. There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders’ meetings and to receive dividends. Preferred stock generally does not have voting rights, but owners of preferred stock receive dividends before common shareholders and have priority in the event that a company goes bankrupt and is liquidated. 


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