Stock: a small piece of a company
A stock is a share of ownership in a company.
A stock’s price changes in the market and is not a promise of future value. A company may distribute part of its profits as a dividend, but it is not required to do so. You can gain from a price increase or lose from a price drop; in an extreme case you can lose your entire investment.
If you bought two shares at 50 ₪ each, the cost is 100 ₪ before fees.
Pick a company on the market and describe in one sentence what it does, without deciding to buy yet.
Investor.gov · Stocks ↗Check your understanding
What do you buy when you buy a stock?
- A part of ownership of a company
- A guaranteed profit
- A bank account
Answer and explanation
A part of ownership of a company. A stock represents ownership. It does not guarantee income or a price increase.
Is a company required to pay dividends?
- Yes, every month
- No
- Only if the stock went down
Answer and explanation
No. Companies decide whether to pay dividends subject to law and their situation.
Continue learning
What is money? — Money is a common means of payment used to buy things and compare prices.
Checking account: the home of daily money — A checking account (OW"S) is a current account: a bank account for everyday transactions.
Profit and loss: reading the numbers — Profit or loss is the difference between an investment’s current value and its cost.