What Are Stocks?

a stock is a share of the ownership of a 

company as the owner of a stock the stockholder you have a claim on the company's assets and earnings suppose Steve is starting a company PI's are us he needs $100,000 but doesn't want to borrow from a bank instead Steve invests $10,000 of his own money and finds nine other investors who are willing to invest $10,000 each in return he gives each investor a certificate that represents 10% of his company each certificate represents 10% of the company's assets the building the pie pans and the baking materials and 10% of any future earnings after one year the company is doing well and the company's total value increases to $200,000 this means each share of the company is now worth $20,000 $200,000 divided by 10 shares that's twice the original $10,000 the original investors can sell their stock in the company to other investors for a 100% profit this is how stocks work stocks are bought and sold daily on the major exchanges