What Is Stock?

Answer:
A stock is a way to own a small piece of a corporation

as part of your investment portfolio. In the past, the company would issue stock certificates as a sort of “title” to prove your ownership. However, in today’s electronic world, most of the time your ownership is simply an electronic record on a statement.

When you purchase a stock, you become a shareholder and stockholder in a corporation. The stock is the representation of the amount of the company that you own. As a benefit of owning the stock, when the company shows a profit you will benefit as well, in the form of increased stock value and paid dividends.

As a part owner, you will also have voting power in the proportion of your ownership of the company. For example, someone that owns one hundred shares of a company will have ten times the voting power of someone who owns ten shares. In order to cast your ballot, you either have to attend the shareholder meeting or fill out a proxy ballot. A proxy ballot is a substitute for your attendance at the corporate meeting. The ballot will contain a series of proposals that you can vote for or against. They usually include questions about board members and issuing stock.

There are several levels of stock you can buy. Penny stocks are the lowest levels of stock that you can purchase. These are stocks of small companies that have little chance of making it big, and the stock can literally be purchased for pennies. At the next level is the growth stock. These are new companies that have good potential for success, but they are not stable and sometimes fail. Blue chip stocks are the highest level of stock that you can buy. These are the big, huge, lumbering corporations that are stable but fairly slow growing. This class includes IBM, GE, and Coca-Cola.