What is the Stock Market?
The stock market provides a place where companies increase capital by selling shares of stock, or equity, to both public and private investors. Stocks give shareholders a claim on corporate earnings in the form of capital gains and dividends.
Individual and institutional investors come together on stock exchanges such as the New York Stock Exchange (NYSE) AND London Stock Exchange (LSE), to buy and sell shares in the public market. When you buy a share of stock on the stock market, you are not buying it from the company directly, but that you are buying it from an existing shareholder.
When you sell stock, or shares, you do not sell your shares back to the company, but instead, sell them to another investor on the exchange.
A stock is a financial apparatus which signifies ownership of a company or corporation and a proportional claim on its assets and earnings. Stocks also have synonyms of shares or equity.
Owning stock means that a shareholder (person who owns shares) owns a slice of the company equal to the number of shares held as a proportion of the company's total outstanding shares.
An individual or entity that owns 100,000 shares of a company with one million outstanding shares would have a 10% ownership stake in it.
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