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Stock

Last updated Nov 1, 2022

# Definition

A Stock is a Security that represents fractional ownership of a Corporation. Units of Stock are called Shares.

# Ownership

A Share of a Stock represents fractional ownership of a Corporation, determined by the number of Outstanding Shares. For example, if a Corporation has 5000 outstanding shares, and I hold 100 of those, then I own 2% of the Corporation. The percentage does not depend on the number of Reserve Shares.

Although a Stock represents fractional ownership of a Corporation, it does not mean ownership of the Corporation itself. Legally, a Corporation is considered a person and thus files its own taxes, owns assets, and can be sued. To own a Corporation would be akin to slavery. Rather, Shareholders are entitled to a portion of the Corporations assets and (depending on the type of stock) may have voting rights at shareholder meetings. Shareholders also receive Dividends (if they are distributed), and can sell their shares to someone else.

# Trading

Stocks are usually bought and sold at Stock Exchanges. TODO

# Types of Stock

# Sources

  1. Investopedia - Stocks
  2. American Bar Association - Corporations and People