Stocks and Shares

November 23, 2010Share Marketby EconomyWatch

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Stocks and Shares are the two sides of the same coin. Basically, they both mean the same thing. The difference between the two lies in the technical definition of the two.

When an investor holds the ownership certificates of a particular company then it is known as Shares.

Stock is a general term for Shares. Stock is the ownership of certificate (either in physical or dematerialized form) of any company. Hence we can say that Stock is the share of any company.

Thus, Stock ownership means holding of ownership certificates of one or more than one company. Shares are certificates which represent ownership rights of the holder in a specific company.

Basically, Stocks and Shares signify the same thing where one is used in general term and the other in specific term.

Stocks generally are of 3 types :-



a) Common Stock
It gives an ownership right to the holders of the stock and hence the share holders are entitled to the earnings of the company according to their stake.
Holders also get dividends on those stocks as and when given by the company.

b) Preferred Stock
These stocks also give ownership right to its holders.
Its holders enjoy the privilege of receiving dividends from the company in preference to any other common share holders.

c) Convertible Preferential StocksThere is also another type of Stock called Convertible Preferential Stocks where the holders of these stocks have the option of converting them to common stocks of the issuing company.

Holder of a Stock is that person who buys the ownership certificate(s) of any company. This person becomes the part owner of the company in accordance to the number of stock he owns. The holder is entitled to claim anything attached to the stock right from the company's earnings to rights of voting.

Stock is nothing but a Stock Certificate which is the proof of ownership of a company. Stock

Certificate of a company are of two forms :-

i. Physical Stock CertificatesThe Stock Certificates were basically plain pieces of papers on which the company specifications and name of the holder were written. These form of certificates are not generally used now-a-days because of the inconveniences related to them such as preservation problems, time consuming affair, etc.

ii. Dematerialized Stock CertificatesFor the sake of convenience the shares in the physical form have been converted into electronic forms and are deposited in the D-mat accounts. Now-a-days most of the stock certificates are in the dematerialized form.

If we discuss all the above mentioned explanations about stocks on a specific company then it will be called as Share. Whenever a person buys a stock of a specific company he becomes the shareholder of that company.

Thus, Stocks and Shares are more or less the same things.

Find out more about the Different Type of Stocks.