what are stocks in the first place?

the last i left off, we were discussing stocks, mutual funds, bonds etc... the latter of which i will not go into detail as it does not interest me much and as such, i have acquired little if not no information at all...

so what are stocks in the first place? simply put, stocks/shares/equities are ownership of the company... when a company sells it shares or 'goes public' it is actually selling an ownership of that company... this is a way of raising money... so, if u buy stocks in a company, u can very well call urself an owner of that company...

how are shareholders paid then? well, as usual, shareholders are entitled to the company's profits, that is, whatever is left after paying the employees of the company, and the creditors (as the name suggests, creditors provide a company with credit capital, and examples are banks and suppliers)... shareholders are then paid in dividends (sometimes as is not always the case, as most of the time, only a small part of the profit are paid out in dividends and the rest is re-invested)...

usually, young companies don't pay out dividends...

so there it is... the basics of stocks/shares/equities... to go into further detail, why don't u visit http://www.morningstar.com/Cover/Workshop.html?pgid=hetablearn

-aDRiANo-