In the market, everything costs something. When a company goes public, it lets the market decide how much it costs. To do that, it divides its ownership into a certain number of fractions and offers the public to buy them. These fractions are called shares, while the total list of shares is company stock.
Thus, trading a share or stock means trading a part of company ownership. Shares may change owners much the same way the currencies or commodities do. In addition, they have certain particularities which may make them more attractive as an investment.
A share offers voting rights to its owner with respect to main directions in the company management. It makes sense because the owner of a company decides what happens to that company. If a company has many owners they all have to take part in the decision making. That is, a part proportionate to each one’s share in the company ownership.
Having a company stock also entitles a shareholder to receive a part of the yearly profit of the company. It also makes sense, because owning a part in a company capital has the final goal of having a return on that investment. As long as the company performs well, it will bring regular profit to its owners or shareholders. This profit will then be distributed among them, once again, according to each one’s share.
2020-07-27 • Updated