A stock or share is a securities certificate or a financial instrument that represents the part ownership of company or corporation and holding of the company’s stock makes you the shareholder. The legal rights of the shareholder  to a proportion of the company’s assets and profits equal to how much stock they own, also gives the voting rights to the shareholders for elect the board of directors and vote the corporate policies.  After all the Equity share holders claim on the corporate earnings in the form of Capital gains and dividends.

For Example: If the XYZ Co has 1,00,000 ( one Lakh) Shares or Equities and you buy 1000 (one thousand) of them.  You become part owner of the company and you can claim to 1% of the company’s assets and earnings.

There are two types of stocks one is common stock another one is preferred stock.

Common stock represent the part ownership in a company and its has own voting rights and the investor get one vote per share to elect the board of director also common shareholder  can claim to a proportion of the company’s assets and profits equal to how much stock they own. For long term investment the common stock holder gets higher returns but in risk point of view the common stock holder entail the high risk if the company goes bankrupt or liquidates and the common shareholders will not received any money the creditors, bondholders and preferred shareholders are paid.

Preferred stock represent the part ownership in a company and its has no own voting rights. They receive regular dividends, in case of any bankrupt or liquidation of company they are repaid first before the common share holder but after the debt holders.