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By Sintilia Miecevole
A copper mining enterprise Stora Kopparberg first introduced
the system of stock in the 13th century. The financial backers
and owners felt the need to raise money for investment in the
new projects of the same company so they started the method of
stock and shares. It was also required in order to ward off
the
threat to the ownership rights if the company was sold, which
would mean complete loss of control.
The investors got the monetary support they were looking for
and at the same time solved ownership issues in case the
company was sold by granting stocks to the people. Plus, they
sold a part to people and still retained control over the
company. Thus, the owner had some portion of the assets, some
power to make decision conditionally. In return, they shared a
part of the profit with the stockowner as dividend.
Financially, stock implies the ownership or share in a
corporation. It gives the stockowner the right to claim a
share
in the assets and income of the corporation. The two types of
stocks, preferred and common differ in many respects. The
common stock owners can vote at the shareholders' meetings
whereas the preferred stockowners cannot vote. Common
stockowners get dividends declared by the company, whereas
preferred stock owners have higher claim in assets and income
of the company. Preferred stock entitles the owner to have his
dividends earlier than the common stock owner. Preferred stock
owner gets the priority when the company goes bankrupt.
Besides
these two, the other types of stock are dual class shares and
treasury stock.
A stockowner is not liable to losses in case the company
closes
and has loans to pay back. The loss of the stockholders is
limited to the money that would have been made by converting
the assets into cash since all the money would be used to
repay
the loans to the creditors.
A stock exchange is the place where trading of shares is
carried out. Individuals and companies sell and purchase
shares
on a large scale. Generally, a particular company trades only
in
one specific market and is said to be on the list of that
particular stock exchange. However, big multinational
companies
can be listed on many stock exchanges. This is called
inter-listed shares.
There are various methods to buy or sell finance stocks, but
the commonest among them is through the mediator called
stockbroker, who actually transfers the shares from one owner
to another. Stocks can be bought directly from the company
also.
The stock market of a country is an indicator of its economy,
which just goes to show the growth and power of the stock
market.
About The Author: Sintilia Miecevole, host of
www.fulstock.com has everything from stock quotes,
news,
portfolio management resources, international market data,
mortgage rates to mutual funds, dividends, trading and much
more. Be sure to visit www.fulstock.com for further
information.
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