Stock is any of the stocks in which ownership of an entity is divided. In American English, the stock is collectively referred to as “equity”. Each share of stock represents fractional membership of the company in proportion to its outstanding shares. This means that each share is entitled to a fraction of a percentage of the assets of the company. There are different types of stock and they vary in terms of trading rights, liability, dividend payouts, etc.
Common stocks are shares that are listed on a stock exchange and traded on the exchange. These stocks usually have limited voting rights and cannot be sold except in certain cases. Dividend paying stocks are issued by corporations as a source of retained earnings and are only available during particular periods. During such period, a predetermined amount of dividends from the dividends is paid to shareholders. Preferred stocks are issued by companies on which the shareholders are entitled to dividends immediately; however, in certain cases preferred stockholders are allowed to sell their shares earlier than the preferred stockholders.
Ordinary or common stock is offered to the public for sale in stock markets. The most common types are shares of all companies or virtually all companies. They are sold in predetermined quantities at stated prices. It is possible that an investor can purchase huge amounts of shares for a relatively low cost.
The New York Stock Exchange is one of the largest stock market exchanges in the United States. It offers both the pre-delivery and post-delivery options for selling stocks. The New York Stock Exchange separates the equity and the option components of the transactions, thereby eliminating the need for the payment of brokerage fees. There are also state by state listings of exchanges that allow the buyers and sellers to conduct virtual trades.
Another type of stock exchanges is the NASDAQ, which is an American exchange. The North American Securities Exchange provides information on over stock exchanges that are traded throughout the US. Other international stock exchanges are the London Stock Exchange (LSE), the Frankfurt International Exchange (GX) and the Tokyo Stock Exchange (TSE). In Europe, there are several stock exchanges, including the EEX, whose main stock markets are in London, Tokyo and New York.
The futures trading market is a kind of stock exchange in which commodities are traded. It was developed to allow the traders to buy and sell stocks when prices are rising. Futures trading is based on speculations about future products and does not follow the same kind of laws and regulations as stock exchanges. Today, it is considered as a high-risk vehicle due to fluctuating market prices and the inability of many companies to reliably predict the future direction of commodities.