Tuesday, 19 February 2013

What is Stock? Why company issue stocks?

Stock or share shows your ownership stake in a corporation. If a company issue 1000 shares of stock then each individual share represents 1/1000 of that company.

Imagine you want to start your company or store. You decide you need 100000 Rs to establish your business. You divide company into 1000 piece or share of stock your price of each new share is 100 Rs. If you can sell the entire share you should have 1000*100 Rs means 100000 Rs which is the amount you required to establish company. Means a company raises their capital by issuing stocks and entitled stock owner or share holder to partial ownership of corporation.

 Simply if you are a stock holder it represents your claim on the company assets and earnings. Stock, share, equity are same thing.

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