You may have heard the words stock, share and equity and are quite confused about these 3 terms. But actually all these 3 words mean the same thing. A stock is an instrument that determines the actual ownership in a company (corporation). The shares that a person holds represent a claim in the company%u2019s (corporations) earnings and assets. The precise ownership in the company is determined by the number of shares a person owns divided by the total number of outstanding shares. When you acquire more stock your ownership stake in the company gets larger. Stocks provide voting rights too. If the stakes in the company rises, the trader may get voting rights also.

If you hold a company%u2019s stock it means that you are one of the shareholders (owners) of the company and you certainly have a claim in the company. It means that you are an owner of each and every property, that the company owns, it may actually be a very tiny portion. Therefore as an owner you get a share of the company%u2019s earnings, profits and voting rights which are attached to that particular stock. A stock certificate represents the stock that you own. Your broker keeps this document because now days everything is online and the records are electronically maintained so that trading becomes easy.

Subscribe to our feed for latest updates on Indian Share Market Tips