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Stocks 101: A Beginner's Guide to Understanding Stock Market Basics
Stocks are a type of security that represents ownership in a company. When you buy stocks, you essentially own a small piece of that company. Stocks can be traded on public stock exchanges, such as the New York Stock Exchange (NYSE) or NASDAQ.
Key Concepts to Understand
- Stocks and Bond Market: Stocks represent ownership in companies, while bonds represent debt. Bonds are typically issued by companies with a stable credit rating and offer regular interest payments. Stocks, on the other hand, carry more risk due to the potential for company failures.
- Risk vs. Return Ratio: This ratio measures the potential return on investment against the potential loss of principal. A higher risk can lead to higher returns, but also comes with a higher risk of losses. For example, investing in a stock may offer a higher return than investing in a bond.
Read more about investing in the stock market at CoastalAgCoop