Home Articles Frequently Asked Questions and Answers About Stocks

Frequently Asked Questions and Answers About Stocks




What is a stock?

A stock is anything that you can buy with the aim of trading it and accruing profits or revenue from it. For instance when you buy stock from a certain company, you are expecting to trade with that kind of stock and make money out of it. Stocks are not normally defined in terms of tangible goods but they can be in terms of shares. Whenever you buy a piece of a company, it is assumed that you have bought some stocks which you will trade and gain from in in future. Stock is a part of a business that you can buy and it is also tangible goods which can be traded in exchange for money at a price higher that its initial price.

Can stock be transferred to another party at any given time?

Yes, stock can be transferred from one person to another as long as there is an agreement between the two individuals. If you are interested in buying online trading stocks from another person, the first thing that you need to do is to draft an agreement between you and the other party. As soon as you have drafted and signed the agreements, the stocks held in s specific company can be transferred to you and you will be in a position to trade with such stocks. However, some online trading companies may not allow the transfer of stocks unless you sell it to the company then the company will sell the stocks at its own discretion. General, stocks are transferable.

What is a stock split?

Stock split is basically the practice of introducing more liquidity in a company so that the investors can be placed at a better position to buy shares at an affordable price. In the event that the shares are too expensive or are laced with stringent measures, the investors may not be in a position to buy shares from that given company, therefore, stock split is a term which is used to mean making shares more affordable for investors by making the company stocks more liquid.

What are the common types of stock?

Stocks are of two types; the first one of the two is the common stocks and the second type is the preferred stocks. Common stocks allows the owner or the holder to have voting rights in a company while the preferred stocks does not entitle the holder to accrue any voting rights at any given point in time. The voting rights are basically the powers which will enable a stock holder to exercise corporate decisions. The preferred stock holders, however, have an advantage where they are usually the first ones to receive dividends before any other shareholder in the company.

What is a stock market and what activities normally happen at a stock market?

A stock market is a place where shares from all the public listed companies are traded. In other words, there are those companies that have been listed as publicly traded companies. These companies are the key role players in a stock market. The companies participate in buying and selling of shares with the aim of making profits from the stocks they trade in on daily basis. Just like any other market, the stock market have a variety of buyers and sellers as well as brokers. All the parties in the stock markets are interested in making a profit out of the trade.

What is a mutual fund as far as stock markets are concerned?

These are a collection of currencies, stocks, bonds and other securities in a stock market. These elements are usually collected in a large common portfolio and this is where any party can get to buy them. Mutual funds are also the basis of showing the financial might of a company. Without mutual funds in stock markets, some of the players may fail to achieve the market or economic goals within a given period of time.

What are NASDAQ and NYSE as used in Stock Markets?

The two initials are basically special sections known as the Stock Exchanges. They are the actual places where the stocks are listed and this is a platform where the public can get to select and buy stocks that they thing will make them profits at the end of a business day. It is also a platform where stocks can be sold with the aim of making profits as well.

Do I need to Bid or it is better to Ask when buying or selling stocks?

If you are a potential buyer to a specific stock, then the best thing to do is place a bid. On the other hand you can ask if you want to buy some stocks. The two terms are useful in stock markets but the difference is that one is used when buying and the other is used when selling stocks respectively.