What is a stock?

A stock represents a share in the ownership of a company. When you purchase a stock, you are essentially buying a small piece of that company, which entitles you to a claim on its assets and earnings. This means if the company performs well and its value increases, the stockholder can benefit from capital gains and may also receive dividends, which are payments made to shareholders from the company's profits.

Stocks are commonly traded on stock exchanges, and their prices fluctuate based on the company's performance and market conditions. This characteristic makes stocks a key component of many investment portfolios, as they provide opportunities for growth over time. Understanding stocks is fundamental for anyone studying career development and financial planning, as they are a primary avenue for wealth accumulation and investment.