Stocks Definition

Stocks are financial instruments that represent a portion of a share in the ownership of a company. A variety of stock exists, the typical types being common stock and preferred stock. Common stock is also known as "voting" stock because owners get a vote in company affairs. Owners of preferred stock do not get to vote, but dividends are preferentially out to preferred stock shares. Other varieties of stock have a wide array of clauses or options attached.

Closely related financial instruments include stock derivatives and stock options. Stocks are owned by shareholders, so called because the hold, or own, a share of the company. The price of a given share of stock fluctuates with market conditions and is tracked on some index. Shareholders purchase stocks to derive income from dividends and presumably because they anticipate the per share price to go up.