Stocks is the common term for the stocks owned by a corporation. In ordinary use, stocks is usually used in the context of company shares of stock. But stocks can also be used interchangeably with bonds, debentures and other common financial instruments.
Stock is simply all the stocks in which ownership of a company is divided ownership. In American English, however, the stocks are collectively referred to as’stock’. A single share of this stock represents fractional share in percentage to the total of all outstanding shares of that company. That means that each individual shareholder of stocks is entitled to a fraction of a percent of that companies stock as dividend.
If you purchase a large number of stocks, you can make money if the company you own goes on to make a profit. In fact, you may make money buying and selling only a small number of stocks at a time. You will make money even better if you have multiple stocks because then you can get double or triple the dividends from each stock you own.
There are two primary ways that individuals buy shares of stocks: through an initial public offering and through an exchange-traded fund. Through an initial public offering, an entity makes an offer to the general public for shares of its stock. The shareholders who receive this offer are allowed to trade in the shares of stock without being required to put up collateral. This type of share is called an ‘out-of-the-money’ issue. The shares are sold for less than $5 per share in most cases.
On the other hand, a company issues an ‘enforceable’ order to its bondholders to purchase additional shares of stocks in the corporation. Bondholders do not need to put up any collateral in order to purchase these additional shares of stocks. These types of stock sales are called ‘put’ and ‘call’ transactions, respectively. When these companies make these sales, they are also obligated to pay out capital gains to bondholders that were paid in earlier years.
Lastly, there are many different stock exchanges throughout the country. In addition to the New York Stock Exchange, there are other national stock exchanges throughout the United States. Some of these national exchanges allow for electronic trading, while others still require manual filing. For investors that do not trade frequently or who do not need the convenience provided by the electronic age, stock exchanges are often a more appropriate venue for purchasing stock in the United States.