Common Stock

Stock is issued by a corporation so they can raise funds to either expand or continue business operations. Stock in a privately held corporation is owned by very few investors. Stock in a publicly held corporation can be purchased by the public. Publicly held shares are either traded on an exchange, the most famous being the New York Stock Exchange (NYSE) or the over the counter (OTC) market like NASDAQ. If a stock symbol has three letters or less, it is traded on an exchange. (for example: C-Citigroup, Inc., BA-Boeing & WMT-Walmart) and if the symbol is four or five letters, it is traded OTC (for example: MSFT-Microsoft). Stocks traded by the public are very liquid, which means they are easy to buy and sell. Stock is known as an equity security because it represents ownership or equity in the corporation. Common stock is the most basic type of equity security and gives the buyer the right to participate in the earnings and assets of the company as well as voting rights and any dividends that are paid by the corporation.