A stock is certain share of any publicly traded corporation. It also represents an amount of ownership of company’s assets and profits. Generally speaking, the more stocks you have, the more you can earn, and the greater voting power you have. Other terms for stocks are shares or equity.
Stock certificate is a fancy paper that represents the proof of your ownership. However, due to the technological advances stock certificates are not used that often as all of the transactions are done electronically.
The main reason for companies to offer stock is to raise funds and money. There are actually two ways to raise money: debt financing and equity finance. Debt financing is a way to raise the required amount of money by borrowing it from third parties. On the other hand, equity financing allows company’s gather the funds by selling a proportion of company’s ownership.
In conclusion, the process of dealing with stocks involves a certain degree of risk. If you don’t research, manage and control your stocks well, you could easily lose your life-time savings. So be sure to know what you are doing before you start dealing with stocks.