Stock

Definition:
A Stock represents a share of ownership in a company. When you purchase stock, you own a fraction of that company, entitling you to a portion of its assets, earnings, and in some cases, voting rights. Stocks are a primary way for companies to raise capital and for investors to build wealth through capital appreciation and dividends.

Types of Stocks:

Type	Description
Common Stock	Offers voting rights and potential dividends; most widely traded form
Preferred Stock	Usually no voting rights; has fixed dividends and priority in liquidation
Class A / B Shares	Different voting power or dividend rights based on share class
Growth Stock	Expected to grow faster than the market; usually reinvests earnings
Value Stock	Trades below its intrinsic value; often pays dividends
Dividend Stock	Regularly pays a portion of earnings to shareholders

How Stocks Work:

Companies issue stock via Initial Public Offerings (IPOs) or secondary offerings
Stocks are traded on public exchanges like the NYSE, Nasdaq, LSE, or Borsa Istanbul
Stock prices fluctuate based on supply and demand, company performance, and market sentiment
Investors can earn money through:
- Capital Gains (buying low and selling high)
- Dividends (regular income from company profits)

Stock Example:

If you own 100 shares of a company with 1,000,000 total shares outstanding, you own 0.01% of the company.
If the company declares a $1 dividend per share, you’d receive $100 in total dividends.

Why People Invest in Stocks:

Wealth Creation: Long-term appreciation outpaces inflation
Ownership: Shareholders can vote on key company decisions
Liquidity: Easily bought and sold during market hours
Diversification: Thousands of companies across various industries and regions
Passive Income: Many stocks pay recurring dividends

Risks of Stock Investing:

Market Risk: Prices can fall due to economic or sector-wide events
Company-Specific Risk: Poor earnings or scandals can hurt value
Volatility: Short-term fluctuations can cause emotional stress
Dividend Cuts: Companies can reduce or eliminate dividend payments
Dilution Risk: New share issuance can reduce existing ownership value

Stock vs. Bond:

Feature	Stock	Bond
Ownership	Represents ownership in a company	Represents a loan to the company
Returns	Dividends + capital gains	Fixed interest payments
Risk Level	Higher	Lower (in general)
Priority in Bankruptcy	Paid last	Paid before shareholders