Understanding a stock

Stocks are an important part of the global economy, allowing companies to raise money for the operation of their businesses by selling shares (or pieces of ownership) to the public. Shares can be bought or sold via an exchange, such as the New York Stock Exchange (NYSE) or Nasdaq. In limited cases, stocks can be sold privately. Specific regulations set by the Securities Exchange Commission (SEC) govern how companies can manage or distribute their stocks. Stocks can be either common stock, which gives shareholders voting rights on certain company decisions, or preferred stock, which gives shareholders no voting rights, but often guarantees them fixed dividend payment in perpetuity.

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