Stocks

Stocks, also called shares or equities, are financial instruments that represent ownership in a corporation. Holders may have voting rights on certain corporate matters and, depending on the type of stock, a claim on a portion of profits. Common stock usually carries voting rights and a residual claim on assets and earnings, while preferred stock generally offers fixed dividends and priority over common stock for payout but may provide limited or no voting rights.

Stocks are issued to raise capital in primary markets, most notably through initial public offerings. After issuance, existing shares are traded on secondary markets such as stock exchanges, including the New York Stock Exchange and Nasdaq. Prices are determined by supply and demand in real time and reflect investors' expectations about a company’s future performance, as well as broader economic conditions and interest rates.

Investors can earn returns through capital gains when selling at higher prices and through dividends. However, stock investments carry risks, including price volatility, company-specific risk, liquidity risk, and regulatory changes. Diversification and prudent risk management are common strategies.

Indices such as the S&P 500 or the Dow Jones Industrial Average track the performance of baskets of stocks to gauge market or sector movements. Ownership of stock also implies certain rights, such as participation in annual meetings and potential influence on corporate governance, depending on share type and jurisdiction.

Stock markets are regulated to protect investors and ensure market integrity; in the United States, oversight is provided by the Securities and Exchange Commission and other bodies, with settlement commonly occurring a few days after trade (for example, T+2).