In the 13th century, the stock system was first used by the Stora Kopparberg copper mine. The company's investors and owners felt the need to raise money to invest in the company's new projects, so they started using stock and shares. It was also needed to protect the ownership rights in case the business was sold, which would mean losing all control.
By giving stocks to the people, the investors got the money they were looking for and took care of ownership issues in case the company was sold. Plus, they sold people a piece of the company while still running it. So, the owner had some of the assets and some of the power to make decisions. In exchange, they gave the stockholders a part of the profit as a dividend.
In terms of money, stock is a share of ownership in a company. It gives the stockholder the right to a share of the company's assets and income. Both preferred and common stocks are different in many ways. The owners of common stock can vote at shareholder meetings, but the owners of preferred stock cannot. People who own common stock get dividends from the company, while people who own preferred stock have a higher claim on the company's assets and income. The owner of preferred stock can get his dividends before the owner of common stock. When a company goes bankrupt, the people who own preferred stock will get paid first. There are also dual class shares and treasury stock in addition to these two.
A stockholder is not responsible for losses if the company goes out of business and still owes money on loans. The stockholders' losses are limited to how much money they would have made by turning the assets into cash. This is because all of the cash would be used to pay back the loans to the creditors.
A stock exchange is a place where people buy and sell shares. People and businesses buy and sell shares on a large scale. Most of the time, a company only trades on one market. When it does, it is said to be on the list of that stock exchange. But big companies that operate in many countries can be listed on many stock exchanges. This kind of stock is called "inter-listed."
There are many ways to buy or sell finance stocks, but the most common way is through a middleman called a stockbroker. The stockbroker is the person who actually moves the shares from one owner to another. You can also buy stocks from the company itself.
The economy of a country can be seen in its stock market, which shows how strong and growing the stock market is.
