April 27, 2009 - 1:59pm
Preferred shareholders are legally entitled to receive a certain level of dividend payments before common shareholders. Preferred stock may also be callable. It means that the company has the option to purchase the shares from shareholders at anytime for any reason.
Keep in mind that even though there is a great deal of commonality between the stocks of different companies, they can still vary. For example, some common stocks may be issued without the typical voting rights, or they may have some restrictions.
A stockholder’s rights
A stockholder (or a shareholder) is a person or company that legally owns one or more shares in a joint stock company. Stockholders have special privileges depending on the type of stock they own: the right to vote (usually one vote per share owned), the right to buy new shares or the right to get the company's assets during its liquidation.
Even though ownership of 50% of stocks means 50% ownership of a company, it doesn’t give the stockholder the right to use a company's equipment, materials, building, or other property. The reason is simple: the company is a legal person, so it owns all its assets itself.
The board of directors decides how many shares the company will issue. In the common case of a publicly traded corporation, there may be thousands of stockholders, so it is not possible to have all of them making decisions related to the company’s work.
However, the stockholder can influence on the company's policy because they can elect the board of directors. So if the shareholders decide that the management is not performing well, they can elect a new board of directors.
But in practice genuinely contested board elections are rare. The candidates are usually chosen by insiders or by the board of directors. They have a considerable amount of stocks and vote themselves.
If you have a company’s shares, it doesn’t mean that you are responsible for its liabilities. So if the company goes bankrupt, you will not be responsible for its debts. However, all money obtained by selling the company’s assets will be paid to its creditors first.
Stock trading
Stocks in publicly traded corporations are bought and sold at a stock market (also known as a stock exchange). It is a place where investors meet and decide on a price of shares of various companies.
Some stock exchanges are physical locations where transactions are carried out on a trading floor. The other type of stock exchange is a virtual market where trades are performed electronically.
It is necessary to divide the primary stock market and the secondary stock market. The primary market is where securities are issued by means of an IPO. In the secondary market, investors sell or buy previously-issued securities without the involvement of the issuer. The secondary market is what people mean when they are talking about a stock market.
Because all the buying and selling is concentrated in one place, share prices are known every second of the day. Therefore, investors can track their fluctuations based on the company news, expert prognosis, national economic news and other factors.
There are three most popular stock markets in the U.S.:
• NYSE (New York Stock Exchange). It is the most prestigious stock exchange in the world. The "Big Board" was established over 200 years ago. The NYSE is similar to a big room with hundreds of sellers and buyers.
• NASDAQ (National Association of Securities Dealers). It is the virtual type of market called over-the-counter (OTC) market. NASDAQ has no central location - trading is done through a computer network of dealers.
• AMEX (American Stock Exchange). Nowadays almost all trading on the AMEX is in small-cap stocks and derivatives.
The two other main financial centers are London Stock Exchange and Hong Kong Stock Exchange. Many large non-U.S companies prefer to be listed on a U.S. stock market as well as on a market in their home country.
Stock prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price goes up. Vice versa, if more people want to sell a stock than buy it the price will drop.
Buying and selling stocks
There are several ways to buy and sell stocks. The most common one is through a brokerage. Whether you use a full service broker or discount broker, they arrange the transfer of stocks from a seller to a buyer. You pay the broker a commission (generally $10 to $100 per trade, depending on the broker).
The full service stock brokers usually charge more per trade, but they will give you expert advice or personal attention. The discount brokers offer little or no expert advice but they charge less money for their service.
You can also buy or sell stocks through a bank or credit union that work with either a full service broker or discount broker. Some companies allow the purchase of shares directly. You can take advantage of their dividend reinvestment plans (DRIP) and direct investment plans (DIP).
Over the last few decades, the average person’s interest in the stock exchange has significantly grown. What was once rich people’s toy now has become a popular financial instrument. This interest coupled with new technology has fueled up stock trading. Nowadays shares are a part of nearly all investment kits.
In business and finance, a share of stock means that the holder owns a part of the company. In the plural, stocks are often used as a synonym for shares, especially in the United States. However, this term is less used outside of North America. Stocks are also called "equity" because the holder has equity of the company.
A company issues shares when it wants to find additional funds to invest in new projects, equipment, marketing strategies, etc. The owners may also wish to reduce their holding and free up some money for their own private use.
A share of stock carries a promise to pay part of the company's profits to a shareholder. Dividends are generally dispersed once a year. For example, if a company has 10 owners, each owning a share, and it makes $50,000 in profit during the year, then each owner gets a dividend of $5,000.
Types of stock
Basically, shares can be divided into two large groups:
• Common stock
Common shares represent part ownership in a company. They carry voting rights that can be exercised in corporate decisions. In a typical case, each share constitutes one vote. The majority of stock is issued in this form, so when people are talking about stocks they usually refer to this type.
• Preferred stock
Preferred stocks also represent some degree of ownership in a company but they typically don’t carry voting rights. You will earn a pre-set percentage of their face value as a dividend, so you can’t benefit as much from the company’s profits as with common stocks.
In business and finance, a share of stock means that the holder owns a part of the company. In the plural, stocks are often used as a synonym for shares, especially in the United States. However, this term is less used outside of North America. Stocks are also called "equity" because the holder has equity of the company.
A company issues shares when it wants to find additional funds to invest in new projects, equipment, marketing strategies, etc. The owners may also wish to reduce their holding and free up some money for their own private use.
A share of stock carries a promise to pay part of the company's profits to a shareholder. Dividends are generally dispersed once a year. For example, if a company has 10 owners, each owning a share, and it makes $50,000 in profit during the year, then each owner gets a dividend of $5,000.
Types of stock
Basically, shares can be divided into two large groups:
• Common stock
Common shares represent part ownership in a company. They carry voting rights that can be exercised in corporate decisions. In a typical case, each share constitutes one vote. The majority of stock is issued in this form, so when people are talking about stocks they usually refer to this type.
• Preferred stock
Preferred stocks also represent some degree of ownership in a company but they typically don’t carry voting rights. You will earn a pre-set percentage of their face value as a dividend, so you can’t benefit as much from the company’s profits as with common stocks.
Preferred shareholders are legally entitled to receive a certain level of dividend payments before common shareholders. Preferred stock may also be callable. It means that the company has the option to purchase the shares from shareholders at anytime for any reason.
Keep in mind that even though there is a great deal of commonality between the stocks of different companies, they can still vary. For example, some common stocks may be issued without the typical voting rights, or they may have some restrictions.
A stockholder’s rights
A stockholder (or a shareholder) is a person or company that legally owns one or more shares in a joint stock company. Stockholders have special privileges depending on the type of stock they own: the right to vote (usually one vote per share owned), the right to buy new shares or the right to get the company's assets during its liquidation.
Even though ownership of 50% of stocks means 50% ownership of a company, it doesn’t give the stockholder the right to use a company's equipment, materials, building, or other property. The reason is simple: the company is a legal person, so it owns all its assets itself.
The board of directors decides how many shares the company will issue. In the common case of a publicly traded corporation, there may be thousands of stockholders, so it is not possible to have all of them making decisions related to the company’s work.
However, the stockholder can influence on the company's policy because they can elect the board of directors. So if the shareholders decide that the management is not performing well, they can elect a new board of directors.
But in practice genuinely contested board elections are rare. The candidates are usually chosen by insiders or by the board of directors. They have a considerable amount of stocks and vote themselves.
If you have a company’s shares, it doesn’t mean that you are responsible for its liabilities. So if the company goes bankrupt, you will not be responsible for its debts. However, all money obtained by selling the company’s assets will be paid to its creditors first.
Stock trading
Stocks in publicly traded corporations are bought and sold at a stock market (also known as a stock exchange). It is a place where investors meet and decide on a price of shares of various companies.
Some stock exchanges are physical locations where transactions are carried out on a trading floor. The other type of stock exchange is a virtual market where trades are performed electronically.
It is necessary to divide the primary stock market and the secondary stock market. The primary market is where securities are issued by means of an IPO. In the secondary market, investors sell or buy previously-issued securities without the involvement of the issuer. The secondary market is what people mean when they are talking about a stock market.
Because all the buying and selling is concentrated in one place, share prices are known every second of the day. Therefore, investors can track their fluctuations based on the company news, expert prognosis, national economic news and other factors.
There are three most popular stock markets in the U.S.:
• NYSE (New York Stock Exchange). It is the most prestigious stock exchange in the world. The "Big Board" was established over 200 years ago. The NYSE is similar to a big room with hundreds of sellers and buyers.
• NASDAQ (National Association of Securities Dealers). It is the virtual type of market called over-the-counter (OTC) market. NASDAQ has no central location - trading is done through a computer network of dealers.
• AMEX (American Stock Exchange). Nowadays almost all trading on the AMEX is in small-cap stocks and derivatives.
The two other main financial centers are London Stock Exchange and Hong Kong Stock Exchange. Many large non-U.S companies prefer to be listed on a U.S. stock market as well as on a market in their home country.
Stock prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price goes up. Vice versa, if more people want to sell a stock than buy it the price will drop.
Buying and selling stocks
There are several ways to buy and sell stocks. The most common one is through a brokerage. Whether you use a full service broker or discount broker, they arrange the transfer of stocks from a seller to a buyer. You pay the broker a commission (generally $10 to $100 per trade, depending on the broker).
The full service stock brokers usually charge more per trade, but they will give you expert advice or personal attention. The discount brokers offer little or no expert advice but they charge less money for their service.
You can also buy or sell stocks through a bank or credit union that work with either a full service broker or discount broker. Some companies allow the purchase of shares directly. You can take advantage of their dividend reinvestment plans (DRIP) and direct investment plans (DIP).
Comments
I receive thousands of e-mails like these daily. I think you should be really dumb to get scammed by them, but if they keep sending, that means they have some "clients".:crazy::lol:
i think scammers can find much people which lose their money