What is Stock

Imagine that you own a business. If you were to divide that business into small pieces and sell those pieces, you would essentially have issued stock. Quite simply, a share of stock is a fraction of ownership in a company.

The money you raise from selling those "pieces" of your business can be used to build new plants and facilities, pay down debt, or acquire another company. Many founders will strive to keep keep at least 51% of the stock, allowing them to retain control of the day to day activities. Any person or institution that owns over a majority of the stock is called the "controlling shareholder". Essentially, this person can do anything they want - right down to firing the CEO.

For more information on stock, how it comes into existence and how you can acquire shares for investment, read An Introduction to the Stock Market. Otherwise, go back to the Beginner's Corner.