April 20,  2021

What Are Stocks And How Do They Work?

By Vaibhavi Dahake

Forbes

Stocks are units of ownership in a company, also known as shares of stock or equities. As you buy a share of stock, you’re purchasing a partial ownership stake in a company, getting benefits as well.

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And the stock market refers to public markets that exist for issuing, buying, and selling stocks that trade on a stock exchange or over-the-counter.

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Companies raise capital to fund their operations by selling shares of stock. So when they sell stock they are inviting the inverters to but a part of ownership.

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When you buy shares of stock in a company, you gain certain privileges depending on the types of shares you own. the return generally comes in two possible ways:

Bloomberg

1.  Voting rights:  You may have the right to vote at the company’s annual shareholder meetings.

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 2. Dividends  You may receive a share of the company’s profits.

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3. Capital appreciation:  When the company’s stock price goes up, your shares increase in value 

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Companies sell shares in their business to raise money. They then use that money for various initiatives: A company might use money raised from a stock offering to fund new products or product lines, to invest in growth.

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Companies typically begin to issue shares in their stock through a process called an initial public offering, or IPO.

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Once a company’s stock is on the market, it can be bought and sold among investors. Its not decided that the stock you buy will be from company, It can be from another invester.

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