Stocks

Stocks are financial instruments that represent ownership shares in a company. When an individual purchases stocks, they acquire a claim on a portion of the company's assets and earnings. Stocks are commonly issued in two main types: common stocks and preferred stocks. Common stockholders typically have voting rights in corporate decisions and may receive dividends, which are payouts of the company’s profits. Preferred stockholders, on the other hand, usually do not have voting rights but have a higher claim on assets and earnings, including fixed dividends.Stocks are traded on stock exchanges, where their prices fluctuate based on supply and demand dynamics in the market, company performance, and broader economic factors. Investing in stocks can yield returns through capital appreciation (an increase in stock price) and dividends. However, investing in stocks also carries risks, including the potential loss of principal if the company's value declines. Investors use stocks as a way to participate in the growth and profitability of businesses and as a vehicle for building wealth over time.