Question

Definition of stock

Answer 1

Stock is a security that signifies ownership in a corporation.

Features of stock:

1.Ownership:Stocks represent ownership in a company.

2.Voting rights:Voting privileges are a characteristic of a stock. Stockholders elect the board of directors and auditors. They also express their opinion in a mergers and acquisitions deal by exercising their voting privileges.

3.Dividend payments: Stockholders are entitled to dividend payments when the company declares them. The dividends represent the shareholders’’ share of profits. But in the event of a bankruptcy, shareholders receive payment only after creditors and bondholders.

4.Liquid investment:Investing in stocks is liquid. Stocks are freely tradeable in public stock exchange. They are issued in an initial public offering. Therefore, stocks are very liquid. Stocks can be purchased and sold at any time.