Stock definition you must know. The following is an explanation of the stocks definitions that you should know. Stocks as an alternative investment medium have a higher potential for profit and loss than other investment media in the long term.
You need to understand the ins and outs of this stocks definitions first, so that you can avoid losses that should not occur. You also should know the ins and outs of stocks, starting from the understanding of stocks and types of stocks.
Stocks are securities that are a sign of ownership of a person or entity in a company. This understanding of stocks means securities issued by a company in the form of a Limited Liability Company or called an issuer.
In a simple sense, stocks are letters that prove that someone has a share in capital of a company. Someone who owns stocks mean has rights to some of the company’s assets. The shareholders themselves are the partial owners of the company.
Thus, if an investor buys shares, he becomes the owner or shareholder of the company. For example, if a company issues 1,000 shares and a person owns 200 shares in a company, then that person owns 20% of the assets in the company.
The majority shareholder will have control rights over a company. The form of stock is a piece of paper that explains that the owner of the paper is the owner of the company that issued the paper. So, this is the same as saving in the bank.
Stocks as a sign of capital participation
Every time you save, you will get a slip explaining that we have deposited some money. In stock investment, what we receive is not a slip but a stock. Stocks can also be interpreted as a sign of capital participation of a person or party, or business entity in a company.
By including the capital, the party has a claim or right to the company’s income. In the stock market, where stock trading activities occur, stock prices fluctuate either in the form of increases or decreases. The formation of stock prices occurs because of the demand and supply of shares.
Demand and supply of stocks are influenced by many factors, both those that are specific in nature related to the stock such as the performance of the company and the industry in which the company is located, or macro or external factors such as developments in interest rates, inflation, exchange rates, and non-economic factors such as social and political conditions.