stock

Ownership interest in a company. Stocks are often called equities because shareholders own the net assets of a company, which is also known as “equity.” As partial owners, shareholders have the right to vote on corporate matters and receive dividends. Stock prices are primarily influenced by earnings, and the market’s expectation of what future earnings will be. A variety of other factors can also affect a stock’s price, including valuation, the economic environment, industry conditions, sentiment, news headlines and changes in the number of shares outstanding. Stocks are more volatile than bonds, but have historically provided higher long-term returns. It is possible to lose a significant part or all of one’s investment in a stock. Also, in the event of bankruptcy, bondholders are paid before shareholders.