Stock is any of the stocks held by a company which is normally traded on the capital market. In American English, the stocks are collectively called as “stock”. Each share of stock represents fractional membership of the company in respect of that particular day. The number of outstanding shares is called as the stock’s outstanding share or number of members. In order to sell or purchase the stock, there must first be an order to effect such transaction from among all the stockholders owning the same.
There are many types of publicly traded corporations. The most well-known ones are those which are listed on the New York Stock Exchange (NYSE) and the NASDAQ (national association of securities dealers). However, in Europe the major stock markets operate via the Euston Board and the London Stock Exchange. In Australia, there are the ASX and in Canada there is the Canadian Securities Exchange.
A stock exchange is a place where shares of stock are traded to retail or institutional clients. Institutional investors usually buy large numbers of stocks, while retail traders usually trade in small amounts of stock. The major advantage of buying stocks via the stock exchanges is that they allow the investor to have a greater control over his or her portfolio. They offer liquidity through an organized trading system and provide information about the performance and book value of stocks through their quarterly reports.
On the other hand, stock options are securities that give the buyer the right to purchase or sell shares at a specific price in the future. These are considered as a hedge in case the price of a specific price is predicted to decrease in the near future. The two types of stock options are: call option and put option. A call option gives the buyer the right to purchase a specified number of shares at a specified price during a fixed period of time, while the put option gives the buyer the right to sell all or a specified portion of shares at a specified price during a fixed period of time.
Another type of investment is mutual funds. These funds are conglomerations of stocks which are all owned by investors. Most of these funds owning stock are specialized in sectors such as the real estate, infrastructure, and technology sectors. As most of these stocks have low liquidity, buying and selling is done rarely, so they are less risky. However, these stocks can be highly lucrative, if used correctly.
There are many different types of stock exchanges out there. Some of them are the New York Stock Exchange (NYSE) and the NASDAQ (national association of securities dealers). There are also automated systems that allow individual investors to trade on the Stock Exchanges. These automated systems are usually stock broking firms which are not accessible to individual investors. Most of these stock broking firms are highly specialized and deal in only a few specific types of stocks.