Stocks simply explained

What is a Stock?

Stocks (eng. Stocks) are nothing other than shares in a corporation. Anyone who purchases such securities automatically becomes a co-owner of the respective company. The value of a stock, called the stock price, is formed on the stock market based on supply and demand.

Why Do Stocks Exist?

For companies, issuing stocks is a form of financing. When a company wants to increase its capital, it issues stocks to create additional equity. In return for the capital received, the buyers of the stocks, the shareholders, have a claim to profit participation (dividends) of the company. Since the shareholders are co-owners of the company, they can participate in general meetings and contribute to decisions.

Stocks as an Investment

For most of us, stocks are merely an investment opportunity. Investors and investors buy stocks in a company hoping to be able to sell them later at a profit. Generally, however, stocks are considered a rather risky investment. How the price of a stock develops can be difficult to predict, as it depends on a multitude of factors. As with all investments, however, the rule is: the higher the risk, the better the return.