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What is a stock?

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by SMO Team

Update: 2022-08-24 19:31:16
What is a stock? And how to make money in stocks?
What is a stock?

What is a stock?

A share is a security representing an interest in a company.  A share is a participation in a company. A company sells a part of its company shares on the stock market to raise money for the company.

What characterizes a share?

Stock outstanding shares

Companies can issue new shares when additional cash is needed. The issuing of new shares is often rated negatively and, depending on the amount of shares issued, leads to falling share prices.

Companies can buy back shares if they have additional cash. This process is a positive signal and is rewarded with rising share prices.

How to make money in stocks?

There are two ways to make money in stocks.

Stock price and dividends


Shares are participations in companies. Companies can distribute corporate profits to their shareholders in the form of dividends.

Profits and losses can be generated with the price development of the shares.