Stock / Share / Equity

When a company breaks down its total evaluation or capital into equal parts, each part is called a share. A share holds financial value (generally called par value) and it cannot be divided further into entities. A person who buys a company’s shares, by paying the offering price of the share, becomes a shareholder in the company or the organisation. The shareholders establish a relationship with the company in which they are entitled to equal distribution of profits. These profits, if applicable, are paid out as dividends.

In old times, shares were given out in physical forms as a written statement on a piece of paper, commonly called a share certificate. Now share certificates have been replacing by shares owned electronically on digital accounts. In American English, shares are commonly called stock and shareholders can be referred to as stockholders. Stocks are fully paid a total number of shares of a company owned by an investor. A single unit of stock is a share. A portfolio of shares also be addressed as stock.

Another term, interchangeably used with stocks is securities or equity. They all give ownership of the company which issues them according to the terms of ownership. Equity implies equal, referring to each share being an equal part of the ownership of the company. Equity investments generally give voting rights to the investor making them a part of the decision making process.

In simpler words, when we buy shares of a company, we own stock or equity of that company.

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