investing

stock

A share of ownership in a corporation, entitling the holder to a portion of the company's assets and profits.

Example

“He bought 50 shares of stock in the tech company after researching its growth potential.”

Memory Tip

You own a piece of the company's STOCK (store of value). Stockholder = part-owner.

Why It Matters

Stocks are a fundamental way for everyday people to build wealth and invest for retirement. By owning stocks, you can potentially earn returns through price appreciation and dividends, helping you reach long-term financial goals like buying a home or retiring comfortably.

Common Misconception

Many people believe that owning stock means they have a say in how a company operates day-to-day. In reality, unless you own a significant percentage of shares, your voting power is minimal and you are primarily a financial investor rather than an active decision-maker.

In Practice

If you buy 100 shares of a company trading at 50 dollars per share, you invest 5000 dollars. If the company profits increase and the stock price rises to 75 dollars per share, your investment is now worth 7500 dollars, representing a 2500 dollar gain or 50 percent return on your investment.

Etymology

From Old English 'stocc' meaning 'tree trunk, stump' — the main stem (root) of a company's ownership.

Common Misspellings

stoskstcoksttockstok

Related Terms

equity dividend market capitalization

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