A stock market is a place where investors trade certificates that indicate partial ownership in businesses for a set price. Through these transactions, companies can raise the initial capital necessary for various aspects of operation, and those who buy the certificates become entitled to a portion of the business’ assets and earnings. Although the value of the certificates is not static and depends to a large extent on public perception, the stock market remains one of the major means of investment and can be used as an indicator of overall economic health.
Stocks and Shares
When companies need money for various goals, one option they have for getting capital is to divide ownership of their businesses up into parts known as shares. They sell these shares and use the funds for tasks like developing products or buying buildings and equipment. To provide some proof of this ownership division, they print certificates called stock, and individuals who purchase the certificates are called stockholders. Many people use the words “stocks” and “shares” — or similarly, “stockholder” and “shareholder” — interchangeably because of their close relationship, but the former term technically talks about certificates for all companies in a very general sense, and the latter usually connects to a single, specific business.