What are actions?

A "stock" is a financial term for corporate property that can be bought and sold by a prescribed class of investors. Companies choose to issue shares for a variety of reasons, and it is usually the company's board of directors that determines how many to sell and how to sell them. Each share represents a part of the company, and owners generally have a voice in corporate policy and governance according to their degree of ownership. In many cases, buying stocks is a popular way to invest money.

Companies choose to sell shares for a variety of reasons. First, selling is a means of generating income. Each share represents a certain percentage, usually a very small percentage, of the corporation. Investors buy each share at a fixed price. In return for their investment, investors usually receive an annual dividend, or a share of the company's total profits.

Many small businesses see the sale of stock as a way to generate capital for new businesses or even as a way to start a business. These companies will sell equity stakes for large sums of money. Most of the time, these sales are private, meaning they are only open to a select number of invited investors. Executives and some employees also often have the opportunity to buy. This benefit is commonly known as a stock option.

There are several types of shares, the purchase and sale of which is established by the issuing company. Another path that companies can take is to make their shares available for public trading. Public transactions take place on the open market and are usually traded on at least one of many international stock exchanges. Any investor can buy shares on the open stock market.

With ownership comes certain benefits and responsibilities. Investors who own a certain percentage of shares usually have a say in how a company is run and are generally entitled to vote on any major corporate decision. The percentage of ownership required to obtain voting and decision-making benefits varies from company to company. The identity of potential owners is one of the reasons why some companies choose not to make their company available for public trading.

Corporate ownership is just one of the benefits of stock ownership. Financial gains and investment potential are another driving force, particularly in the open market. Strategic buying and selling of corporate stock is a popular investment strategy for many people.

As corporate earnings rise, so do stock prices in most situations. Investors who perceive that a company is on the cusp of growth may make significant investments in stocks at a low price with the aim of selling to a new buyer when dividends and prices rise. Other times, investors may buy stock in growing companies as a way to generate income over a long period of time.

Publicly traded shares are often sold through brokerage firms and sometimes through the issuing corporation. Stocks are commonly traded and bought in quick succession depending on the ups and downs of the market. These purchases or sales are made on the stock exchange floor, at brokerages or online.

As the market is constantly changing, there is no sure way to definitively identify the best or worst stocks. The best stocks one day can be worth significantly less the next. While investing by share in a company can be a profitable scheme, shares are generally considered to be among the most volatile investments. If a company goes bankrupt or when there are no profits, the value of the stock usually depreciates quickly. Stock purchases should only be made with careful research and planning.

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