Understanding Stocks: A Beginner's Guide
Stocks are a fundamental component of the stock market, representing ownership in companies. In this section, we will delve into the world of stocks and explore what they are, how to invest in them, and why it's essential for beginners.
What Are Stocks?
Stocks represent a claim on a portion of an entity's assets or earnings. When you buy a stock, you essentially purchase a small piece of that company.
- Corporations issue stocks to raise capital for various purposes, such as expanding their operations, investing in new technologies, or paying off debt.
- Investors who own stocks can potentially earn dividends, which are portions of the company's earnings distributed to shareholders.
Types of Stocks
In addition to common stocks, there are other types of stocks, including:
- American stocks: issued by the U.S. government or state governments.