Stocks, also known as equities or shares, represent a fractional ownership stake in a company. When a company wants to raise money to fund its growth, it can “go public” by selling these ownership units to investors through an Initial Public Offering (IPO). By buying a stock, an investor becomes a part-owner of that company.
Stock prices are determined by supply and demand, and they can rise or fall based on a company’s performance, news, and overall market sentiment. Investors can profit from stocks in two primary ways: through capital appreciation—selling their shares for a higher price than they paid—or through dividends, which are portions of the company’s profits distributed to shareholders. Stocks are a fundamental component of the financial system, providing a crucial way for businesses to raise capital and for individuals to potentially grow their wealth over the long term.
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