Legal Definitions - stock

A stock is a type of investment that represents ownership in a company. When you buy a stock, you become a shareholder in that company and have a claim on a portion of its assets and earnings.

There are two main types of stocks:

• Common stock: This is the most common type of stock. It gives shareholders the right to vote on company decisions and receive dividends (a portion of the company's profits).
• Preferred stock: This type of stock typically doesn't give shareholders voting rights, but it does give them priority when it comes to receiving dividends and getting paid if the company goes bankrupt.

For example, let's say you buy 100 shares of Apple stock. You now own a small piece of Apple and have the right to vote on important company decisions, such as who sits on the board of directors. You also have the potential to receive a portion of Apple's profits in the form of dividends.

When a company goes public, it sells shares of its stock to the public for the first time. This is called an initial public offering (IPO). Once a company's stock is listed on a stock exchange, such as the New York Stock Exchange (NYSE) or the Nasdaq, anyone can buy and sell shares of that stock on the open market.

Overall, stocks can be a good way to invest your money and potentially earn a return. However, it's important to do your research and understand the risks involved before investing.