A share of ownership in a company is called stock. Stock represents an ownership claim on part of a corporation, although the rights attached to that claim depend on the class of shares and the company’s rules.
Companies issue stock to raise capital. Investors who buy it may benefit if the market value increases, and some companies distribute part of their profits as dividends. Common stock often includes voting rights, while preferred stock commonly gives holders priority for dividends or assets in a liquidation but may have limited voting rights.
Stock is not the same as a bond. A stockholder is an owner, whereas a bondholder is a lender to the company or other issuer. Stock prices fluctuate because investors continually reassess expected profits, risks, interest rates, economic conditions, and supply and demand. Ownership does not guarantee profits, and shareholders can lose some or all of their investment.