Basics About Stocks and Stock Exchanges

Stocks are all the stocks in which ownership of a company is divided up. In American English, the stocks are collectively referred to as “stock.” Each share of this stock represents a fractional ownership in accordance to the number of outstanding shares. The number of outstanding shares is usually indicated on the notice board of a company. There may also be dividends declared periodically.


Generally, shares of stock are owned by the corporation’s shareholders. These shareholders have a vote, together with other shareholders, at meetings called general meetings to choose the directors of the company. The number of such shares of stock that are outstanding at any given time is referred to as the company’s equity. All these shares of stock are owned by the corporation; and all the holders of these stocks are considered owners of the company.

Usually, there are two types of stocks: common stock and preferred stocks. Common stocks are those shares of stock that are outstanding and are owned by the shareholders of a corporation. Preferred stocks are stocks that are preferred by the shareholders of a corporation. This means that, before a shareholder can sell any of his stocks, he has to offer a bond or a property to secure the payment. Common stock is not so easily sold.

In general, when a shareholder offers a bond, a trust deed or a mortgage for his shares of stocks, it is known as a ‘security’ and that security is added to the balance of that shareholder’s account. On the other hand, when a shareholder sells a bond, a trust deed or a mortgage, he receives a cashier’s check for the amount of money realized from the sale. In America, it is very difficult to sell a bond. Only those companies which are registered at the Securities and Exchange Commission’s offices are allowed to do so. A person who is interested in selling his bonds has to register himself at the SEC’s office and then wait for the commissions to be paid.

Stocks and stocksexchange commissions vary widely based on what kind of security the buyer wants to buy. For instance, common stocks tend to have lower rates of commission than preferred stocks or securities. The price of stocks varies based on what kind of ownership is chosen: limited liability corporation, nominee stock, common stock, etc. The price of a bond also varies depending on its ownership structure.

When you buy a share of stocks from an American company, you will receive shares as a holder of that corporation. But when you buy shares of stocks from any other foreign company, you will receive (the ‘owner’) shares as a bearer of that corporation’s assets. There are two main types of ownership in corporations: common ownership and preferred ownership. In a corporation where the general public holds majority shares of stock, most often the shareholders are called common stockholders. Whereas, in a corporation where the majority of the issued shares are held by management corporation members, the shareholders are known as preferred stockholders.