Stock (share)

A company divides its ownership into shares. If it has issued ten million shares and you hold one hundred thousand, you own 1% of it. Shareholders are entitled to a proportional slice of any dividends the board declares and, for most ordinary shares, a vote on matters such as electing directors. Shareholders are owners, not lenders: if the company fails, creditors and bondholders are paid first and shareholders receive whatever is left, which is often nothing. Liability is limited, so the holder of a fully paid share cannot lose more than the amount invested.

In everyday use the words stock and share mean the same thing; American English tends to say stock, British English share. Many companies also issue preference shares (preferred stock in the US), which usually pay a fixed dividend and rank ahead of ordinary shares but carry fewer voting rights. Over long periods shares have historically delivered higher returns than cash or bonds, but with much larger swings in value along the way. A single company can fall sharply or go bust, which is why most investors hold many shares, often through a fund.