What Is Stock?

TOPICS:DIFFERENCE BETWEEN COMMON AND PREFERRED STOCKS

HOW STOCK EXCHANGE WORKS IN PAKISTAN

Constants

What are stocks?

➢Types of Stocks traded in Pakistan

Common Stocks

Preferred Stocks

➢Difference Between Common and preferred stocks

What is Stock Exchange?

➢What is Index?

➢How Stock Exchange works?

➢Role of brokers in Stocks trade

Conclusion

WHAT ARE STOCKS?

Stocks are the shares in the ownership of a company. Stock represents a claim on the company's assets and earnings. Stockholders are the investors and become the owners of the company. As you acquire more stock, your ownership stake in the company becomes greater. Whether you say shares, equity, or stock, it all means the same thing. A stock is represented by a stock certificate. But now-a-days you won't actually get to see this document

because your brokerage keeps these records electronically. Stock has

limited liability which means if the company faces the bankruptcy then stockholder is not personally liable for the debts of the company. Hence liability is limited up to the value of stocks.

TYPES OF STOCKS TRADED IN PAKISTAN :

In Pakistan Stock markets there are two types of stocks:

1.1)Types of Stocks

COMMON STOCKS:

In Pakistan mostly companies issue common stocks. Common stock represents ownership in a company and a claim or dividend on a portion of profits. Shareholder gets one vote per share to elect the board of directors who oversee the major decisions made by the management. Common stockholders entitled to dividend if and when declared by the board of directors. They have the last claim on the assets of the company after paying off creditors, bondholders and stockholders, that’s why Common stockholders are also known as “the residual”.

Common stockholders invest in the firm only upon the expectation of future returns. They are not guaranteed any return, but merely get what is left over after all the other claims have been satisfied. Since the common...