What are Stocks and How do they Work?
Stocks, also known as equities, represent ownership in a company. When you buy a stock, you're essentially buying a small piece of that company.
- Companies issue stocks to raise capital for various purposes such as expanding operations, financing growth initiatives, or repaying debt.
- When a company's revenue exceeds its expenses, it can choose to distribute a portion of its earnings in the form of stock dividends. This is how companies generate returns on their investments.