From the course: Build Your Financial Literacy
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Stocks vs. bonds
From the course: Build Your Financial Literacy
Stocks vs. bonds
- When you purchase a stock in the stock market, you have purchased a fraction of ownership in a corporation. Yes, that's right. When you buy a share of stock, you are now one of the mini stock owners of that company. To clarify you did not own the corporation itself. Rather, the corporation has sold you a unit of ownership in order to raise funds to operate their business. As an owner in stock, you are called a shareholder. The more shares that you purchase of a single company, the bigger your portion of ownership is in it. For example, if a corporation issues a thousand shares of stock, and you purchase a hundred shares of that stock, you now have claim to 10% of that company's assets and earnings. So a hundred divided by a thousand equals 10%. Now, why would you want to buy a corporation stock? As a shareholder in the company, you're now entitled to a portion of their assets and profits. As a result, your investment in…
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