Definition: The smallest unit of company ownership that can be purchased from a corporation and later bought and sold among investors.
Investeach explains: Companies raise money by selling shares of stock to investors. A share in a tiny "penny stock" corporation can literally sell for a penny (and often, much less)! In the case of Berkshire Hathaway Corporation (symbol BRKA), a single share is usually worth more than $200,000!
There are generally two types of stock: common and preferred. They come with different rights and privileges. Unless otherwise noted, a discussion of shares of stock refers to the corporation's common stock.
The selling price for a share can be very misleading. For example, if Frugle sells for $500 and Macrisoft $25, does this mean that Frugle is 20 times more valuable a company than Macrisoft? No. The reason is that we haven't considered how many shares of each company exist and are in the hands of investors (ie, shares outstanding). If it turns out there are 30 times more Macrisoft shares in existence than Frugle shares, Macrisoft would be the more valuable company.
Riddle me this:
1. What are the two common types of stock?