Investing in Stock Market
Definition of Investment in Stock Market
Stock, Share, Equity – a security representing ownership in a corporation a claim on a share of the corporation’s assets and earnings.
Common stock usually gives the owner a right to vote at shareholders’ meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a priority over common shares when dividends are distributed or during liquidation.
Where Stocks are Traded
Stocks are traded on all stock exchanges. Main stock exchanges are: NYSE, AMEX, LSE, Toronto Stock Exchange, EuroNext, Tokyo Stock Exchange, Deutsche Borse etc.
Benefits of Investment in Stock Market
- high investment return potential
- allows voting on corporate matters
- possibility to receive dividends
- capital gains taxation
- wide universe of investment options
- investment liquidity
- well established market and rules
Negatives of Investments in Stock Market
- potential to lose the entire investment
- insider trading/window dressing + other ethical issues with management
- possible stock dilution
- dividends are taxed as income
- penny stock rules
- short sales are restricted
- some stocks are illiquid
- market panic can cause large swings in price
