Stocks

To understand the market the first step is for you to learn and understand stocks.

In a very simple form, a share is one of the equal portions into which the ownership of a company is divided. If you own shares of a company, that makes you a part owner of the company. They are also known as units of investment called equities; they are used for trading on the floor of the exchanges e.g. NYSE

Classification of Stocks

They are classified according to their diference in market price, dividend, rules etc.

Ordinary: also known as common shares. Dividends are paid according to a certain profit from the company's turn over. Owners have more responsibilities in that they are the last to get anything when the company folds up and shares its assets. Apart from these all owners of these type of equities have equal voting right and dividends with respect to each individual unit of share.

Prefered: This is the type on which a fixed dividend is guaranteed before payment is made to other shareholders. The holder of this type of shares has a slightly better advantage of recovering some money in a case of liquidation. Usually except otherwise stated they don't have voting rights.

Convertible prefered: This gives the holder the option or opportunity to change his or her shares to ordinary/common shares at a pre-fixed price and date.

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