The stock also capital stock of a corporation is constituted of the equity stock of its owners. A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. In liquidation, the stock represents the residual assets of the company that would be due to stockholders after discharge of all senior claims such as secured and unsecured debt.

Stockholders' equity cannot be withdrawn from the company in a way that is intended to be detrimental to the company's creditors. The stock of a corporation is partitioned into sharesthe total of which are stated at the time of business formation. Additional shares may subsequently be authorized by the existing shareholders and issued by the company.

In some jurisdictions, each share of stock has a certain declared par valuewhich is a nominal accounting value used to represent the equity on the balance sheet of the corporation. In other jurisdictions, however, shares of stock may be issued without associated par value. Shares represent a fraction of ownership in a business. A business may declare different types or classes of shares, each having distinctive ownership rules, privileges, or share values. Ownership of shares may be documented by issuance of a stock certificate.

A stock certificate is a legal document that specifies the amount of shares owned by the shareholderand other specifics of the shares, such as the par value, if any, or the class of the shares.

In the United KingdomRepublic of IrelandSouth Africaand Australiastock can also refer to completely different financial instruments such as government bonds or, less commonly, to all kinds of marketable securities. Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions.

Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Shares of such stock are called "convertible preferred shares" or "convertible preference shares" in the UK.

New equity issue may have specific legal clauses attached that differentiate them from previous issues of the issuer. Some shares of common stock may be issued without the typical voting rights, for instance, or some shares may have special rights unique to them and issued only to certain parties. Often, new issues that have not been registered with a securities governing body may be restricted from resale for certain periods of time. Preferred stock may be hybrid by having the qualities of bonds of fixed returns and common stock voting rights.

They also have preference in the payment of dividends over common stock and also have been given preference at the time of liquidation over common stock. They have other features of accumulation in dividend. In addition, preferred stock usually comes with a letter designation at the end of the security; for example, Berkshire-Hathaway Class "B" shares sell under stock ticker BRK. B, whereas Class "A" shares of ORION DHC, Inc will sell under ticker OODHA until the company drops the "A" creating ticker OODH for its "Common" shares only designation.

This extra letter does not mean that any exclusive rights exist for the shareholders but it does let investors know that the shares are considered for such, however, these rights or privileges may change based on the decisions made by the underlying company. Selling Restricted and Control Securities.

Investors either purchase or take ownership of these securities through private sales or other means such as via ESOPs or in exchange for seed money from the issuing company as in the case with Restricted Securities or from an affiliate of the issuer as in the case with Control Securities.

Investors wishing to sell these securities are subject to different rules than those selling traditional common or preferred stock. These individuals will only be allowed to liquidate their securities after meeting the specific conditions set forth by SEC Rule A stock derivative is any financial instrument which has a value that is dependent on the price of the underlying stock.

Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm's stock, e. Stock futures are contracts where the buyer is longi. Stock index futures are generally delivered by cash settlement. A stock option is a class of option. Specifically, a call option is the right not obligation to buy stock in the future at a fixed price and a put option is the right not obligation to sell stock in the future at a fixed price.

Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative.

The most popular method of valuing stock options is the Black Scholes model. During the Roman Republic, the state contracted leased out many of its services to private companies. These government contractors were called publicanior societas publicanorum as individual company. They issued shares called partes for large cooperatives and particulae which were small shares that acted like today's over-the-counter shares.

The earliest recognized joint-stock company in modern times was the English later British East India Companyone of the most famous joint-stock companies. It was granted an English Royal Charter by Elizabeth I on December 31,with the intention of favouring trade privileges in India. The Royal Charter effectively gave the newly created Honourable East India Company HEIC a year monopoly on all trade in the East Indies.

Soon afterwards, in[13] the Dutch East India Company issued the first shares that were made tradeable on the Amsterdam Stock Exchangean invention that enhanced the ability of joint-stock companies to attract capital from investors as they now easily could dispose of their shares.

Between and it traded 2. The innovation of joint ownership made a great deal of Europe 's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families. Economic historians [ who? Edward Stringham also noted that the uses of practices such as short selling continued to occur during this time despite the government passing laws against it.

This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary.

A shareholder or stockholder is an individual or company including a corporation that legally owns one or more shares of stock in a joint stock company.

Both private and public traded companies have shareholders. Shareholders are granted special privileges depending on the class of stock, including the right to vote on matters such as elections to the board of directorsthe right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company.

However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors. Shareholders are a one type of stakeholderswhich may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders.

Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other.

However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in CaliforniaUSAmajority shareholders of closely held corporations have a duty not to destroy the value of the shares held by minority shareholders.

The largest shareholders in terms of percentages of companies owned are often mutual funds, and, especially, passively managed exchange-traded funds. The owners of a private company may want additional capital to invest in new projects within the company.

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They may also simply wish to reduce their holding, freeing up capital for their own private use. They can achieve these goals by selling shares in the company fraud work in binary options trading the general public, through a sale on a stock exchange. This process is called an initial public offeringor IPO.

By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends. The owner may also inherit debt and even litigation. In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company.

Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company. In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted — effective control rests with the majority shareholder or shareholders acting in concert. In this way the original owners of the company often still have control of the company.

This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.

In most countries, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes:. Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors.

Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management agent are performing poorly they can select a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections dfo moorabbin opening hours australia day rare.

Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held or voted by insiders. Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. However, all money obtained by converting assets into cash will be used to repay loans and other debts first, so that shareholders cannot receive any money unless and until creditors have been paid often the shareholders end up with nothing.

Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing for example issuing bonds can be done to avoid giving up shares of ownership of the company.

Unofficial financing known as trade financing usually provides the major part of a company's working capital day-to-day operational needs. In general, the shares of a company may be transferred from shareholders to other parties by sale or other mechanisms, unless prohibited.

Most jurisdictions have established laws and regulations governing such transfers, particularly if the issuer is a publicly traded entity. The desire of stockholders to trade their shares has led to the establishment of stock exchangesorganizations which provide marketplaces for trading shares and other derivatives and financial products.

Today, stock traders are usually represented by a stockbroker who buys and sells shares of a wide range of companies on such exchanges. A company may list its shares on an exchange by meeting and maintaining the listing requirements of a particular stock exchange.

In the United States, through the intermarket trading system, stocks listed on one exchange can often also be traded on other participating exchanges, including electronic communication stock market nyse investors ECNssuch as Archipelago or Instinet. S companies choose to list on a U. These companies must maintain a block of shares at a bank in the US, typically a certain percentage of their capital.

On this basis, the holding penguin gold money maker 2010 establishes American depositary shares and issues an American depositary receipt ADR for each share a trader acquires.

Likewise, many large U. Small companies that do not qualify and cannot meet the listing requirements of the major beginners guide to binary option trading signals may be traded over-the-counter OTC by an off-exchange mechanism in stock option tax calculator ireland trading occurs directly between parties.

The major OTC markets in the United States are the electronic quotation systems OTC Bulletin Board OTCBB and OTC Markets Group formerly known as Pink OTC Markets Inc. Shares of companies in bankruptcy proceedings are usually listed by these quotation services after the stock is delisted from an exchange. There are various methods of buying and financing stocks, the most common being through a stockbroker.

Brokerage firms, whether they are a full-service or discount broker, arrange the transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed with a stock exchange. There are many different brokerage firms from which to choose, such as full service brokers or discount brokers.

The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades.

Another type of broker would be a bank or credit union that may have a deal set up with either a full-service or discount broker. There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. However, the initial share of stock in the company will have to be obtained through a regular stock broker.

Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of binary options in nse. When it comes to financing a purchase of stocks there are two ways: Buying stock on margin means buying stock with money borrowed against the value of stocks in the same account.

These stocks, or collateralguarantee that the buyer can repay the loan ; otherwise, the stockbroker has the right to sell the stock collateral to repay the borrowed money. Buying on margin works the same way as borrowing money to buy a car or a house, using a car or house as collateral.

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order short selling ; although a number of reasons may induce an investor to sell at a loss, e. As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction.

After the transaction has been made, the seller is then entitled to all of the money.

An make money smc part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis. The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is sensitive to demand.

However, there are many factors that influence the demand for a particular stock. The fields of fundamental analysis and technical analysis attempt to understand market conditions that lead to price changes, or even predict future price levels.

A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index ACSIis significantly correlated to the market value of a stock. Stocks can also fluctuate greatly due to pump and dump scams. At any given moment, an equity's price is strictly a result of supply and demand. The supply, commonly x rebirth easy money to as the floatis the number of shares offered for sale at any one moment.

The demand is the number of shares investors wish to buy at exactly that same time. The price of the stock moves in order to achieve and maintain equilibrium. The product of this instantaneous price and the float at any one time is the market capitalization of the entity offering the equity at that point in time. When prospective buyers outnumber sellers, the price rises. When sellers outnumber buyers, the price falls. Thus, the value of a share of a company at any given moment is determined by all investors voting with their money.

If more investors want a stock and are willing to pay more, the price will go up. If more investors are selling a stock and there aren't enough buyers, the price will go down. Of course, that does not explain how people decide the maximum price at which they are willing to buy or the minimum at which they are willing to sell. In professional investment circles the efficient market hypothesis EMH continues to be popular, although this theory is widely discredited in academic and professional circles.

Briefly, EMH says that investing is overall weighted by the standard deviation rational; that the price of a stock at any given moment represents a rational evaluation of the known information that might bear on the future value of the company; and that share prices of equities are priced efficientlywhich is to say that they represent accurately the expected value of the stock, as best it can be known at a given moment.

In other words, prices are the result of discounting expected future cash flows. The EMH model, if true, has at least two interesting consequences. First, because financial risk is presumed to require at least a small premium on expected value, the return on equity can be expected to be slightly greater than that available from non-equity investments: Second, because the price of a share at every given moment is an "efficient" reflection of expected value, then—relative to the curve of expected return—prices will tend to follow a random walkdetermined by the emergence of information randomly over time.

Professional equity investors therefore immerse themselves in the flow of fundamental information, seeking to gain an advantage over their competitors mainly other professional investors by more intelligently interpreting the emerging flow of information news. The EMH model does not seem to give a complete description of the process of equity price determination.

For example, stock markets are more volatile than EMH would imply. In recent years it has come to be accepted that the share markets are not perfectly efficient, perhaps especially in emerging markets or other markets that are not dominated by well-informed professional investors.

Another theory of share price determination comes from the field of Behavioral Finance. According to Behavioral Finance, humans often make irrational decisions—particularly, related to the buying and selling of securities—based upon fears and misperceptions of outcomes.

The irrational trading of securities can often create securities prices which vary from rational, fundamental price valuations. For instance, during the technology bubble of the late s which was followed by the dot-com bust of —technology companies were often bid beyond any rational fundamental value because of what is commonly known as the " greater fool theory ".

The "greater fool theory" holds that, because the predominant method of realizing returns in equity is from the sale to another investor, one should select securities that they believe that someone else will value at a higher level at some point in the future, without regard to the basis for that other party's willingness to pay a higher price.

Thus, even a rational investor may bank on others' irrationality. When companies raise capital by offering stock on more than one exchange, the potential exists for discrepancies in the valuation of shares on different exchanges.

A keen investor with access to information about such discrepancies may invest in expectation of their eventual convergence, known as arbitrage trading. Electronic trading has resulted in extensive price transparency efficient-market hypothesis and these discrepancies, if they exist, are short-lived and quickly equilibrated. From Wikipedia, the free encyclopedia. For "capital stock" in the sense of the fixed input of a production function, see Physical capital.

For the goods and materials that a business holds, see Inventory. For other uses, see Stock disambiguation.

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Retrieved 25 February Preferred Stock, and Stock Classes". Marcus, Investments9th Ed. Selling Restricted and Control Securities". US Securities and Exchange Commission. Retrieved 18 May The Anglo-Dutch Rivalry for the East India Trade". The Journal of Political Economy.

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