Stock, also known as capital stocks, refers to the capital that is invested into a company or business by the founders of the institution. Stocks are divided into a certain amount of shares, whose total number is determined at the time the business or company is created and properly registered with the appropriate agencies.
The shares of stock of the company will, therefore, have a specific value attributed to them depending on the overall total amount that is invested into that particular business. Furthermore, this also allows for different types of stocks to exist. Stocks can vary in terms of the various ownership rules, the actual value of the stocks, and the privileges that the stockholder has vested in a particular company or business.
Generally speaking, there are two types of stocks in regards to stock trading. Common stock refers to the shares that allow a person to have voting rights, allowing the holder of such shares to have a personal say in the decisions of the business or company. The other kind of stocks is preferred stock and may prove to be the most common in stock trading.
This kind of stock shares does not carry any inherent ownership rights in the business, though there will be a certain amount of dividend payments made to the owner of such stock shares. Even though these may be the most common stocks, there are some variances that combine both types of stock shares.