If you have ever been curious about how companies raise funds or use their stocks for public investment, then you may have heard about the stock market. The stock market is a charming and dynamic world, with millions of people trading stocks of listed companies every day. But what are stocks and how do they operate?

Stocks represent ownership of a company, and by purchasing stocks, investors become part owners of the company. Understanding how stocks operate is crucial for anyone interested in investing in the stock market, and it is also an important knowledge for anyone who wants to understand the internal workings of the modern economy.

What is a stock?

Stocks, also known as stocks, are the units of ownership of listed companies. When a company wants to raise funds to fund its operations or expand its business, it can issue stocks to the public. By purchasing shares of the company, you have the right to receive a portion of its profits in the form of dividends.

Stocks are usually traded on stock exchanges, where investors can buy and sell them. The price of a stock is determined by the supply and demand relationship, and its value fluctuates based on factors such as the company's financial performance, market trends, and investor sentiment.

Do you know?

There are different types of stocks, including common stocks and preferred stocks.

Ordinary shares represent the majority of the shares issued by a company and give holders the right to vote on company decisions and receive dividends.

Preferred stocks, on the other hand, usually do not have voting rights, but holders have the right to receive dividends before ordinary shareholders in the event of company liquidation.

How do stocks operate?

They work by allowing investors to purchase a portion of the company's ownership, thereby participating in the company's growth and profits. When a company issues stocks, it will do so through an initial public offering or secondary issuance. Once they are available for trading, investors can buy and sell them on the stock market through brokers or trading platforms.

When investors buy stocks, they are actually investing in the future success of the company. If a company performs well and increases profits, the value of its stocks may rise, allowing investors to sell them for profit. In addition, many companies pay dividends to their shareholders, which provides a fixed source of income for investors holding stocks.