What is a stock?

A stock (also called a share) is a small piece of ownership in a company. When a company is split into, say, one billion shares and you own one, you own one-billionth of that company.

Why companies sell shares

Companies sell shares to raise money: to build factories, launch products or hire people. In return, shareholders own part of the business and share in how it does, good or bad.

How you can gain or lose

• The price changes. If more people want to buy a share than sell it, the price goes up. If more want to sell, it goes down.
• Dividends. Some companies pay part of their profit to shareholders. Many growing companies pay none.
• You can lose money. Share prices can fall, sometimes a lot, and a company can fail entirely.

Where shares are traded

Shares are bought and sold on stock exchanges such as the New York Stock Exchange, Euronext Paris or the Tokyo Stock Exchange. Each company has a short code called a ticker.