How to Invest in Stocks – A Primer
In business, stocks are the entities themselves. Stocks are the units in which stock investments (shares) are valued. In business, stocks represent value and are used as instruments of trade. For instance, shares bought by an individual represent a fraction of an actual stock ownership.
In finance, stock basically includes all the shares of a company which are owned by an individual or corporation. A single share of stock signifies fractional ownership in ratio to the total number of outstanding shares. The stocks may be traded publicly or in a closed-end market, such as the New York Stock Exchange. For instance, in Apple Inc., the stocks are listed in the New York Stock Exchange.
All publicly traded corporations have certificates of ownership, called a’share’ or’stock’ in financial terminology. Shares represent units of ownership for the corporations. Shares can be sold for retail price or through broker dealers, who purchase and sell shares on behalf of their clients. Broker dealers usually deal with stocks of various corporations.
The most basic type of stock is 100 percent owned; that is, it signifies ownership by an individual or entity alone. A typical corporation has a majority of its shares owned by the general public. This means that the percentage of shares owned by the corporation is quite high. A limited liability corporation is different from a corporation in this respect.
There are two main types of stock exchanges. The New York Stock Exchange acts like a central clearinghouse for trading stocks among registered representatives and individually interested individual investors. These trades are usually done electronically. The Chicago Board of Trade acts like a stock exchange where trades are made physically, but trades are also facilitated electronically. The National Association of Securities Dealers is the other major stock exchange in the United States.
If you have a desire to invest in stocks and want to know how to invest in stocks so that you can earn money, then you need to become familiar with the various stock markets. By learning how to invest in stocks, you not only increase your chances of making a profit but also help individual investors such as yourself. So, the next time you are wanting to know how to invest in stocks, remember that you should first research the various stocks available so that you can choose the ones that are right for you.