## Stocks are units of ownership in a company - Understanding the differences clearly

### Is the meaning of Stock and Shares really different?

The term "Stock" has a broader meaning, referring to ownership in a company or various assets, from one or more entities. Meanwhile, "Shares" is more specific, usually referring directly to units of ownership in a particular company.

When a company decides to sell (Stock), investors who purchase become shareholders and gain rights to a share of profits and assets. Shareholders can claim dividends and other benefits from the company. Additionally, if the company performs well and the price increases, shareholders can sell for a profit.

"Share" or stock units refer to units of ownership in a company, mutual fund, or even ETFs. Overall, both Stock and Shares indicate ownership rights but may have slightly different scopes of meaning.

### Why do investors buy Stock?

Investors have various reasons for purchasing stocks:

- **Capital Appreciation**: Occurs when stock prices rise from the purchase price. Investors can sell at a higher price.
- **Dividends**: Many companies distribute part of their profits to shareholders quarterly or annually.
- **Voting Rights**: Some types of shareholders can participate in company decisions and influence the company's direction.

### Why do companies issue (Stock)?

Companies issue stocks to raise funds from investors. This capital is used to:

- Pay off existing debts
- Develop and launch new products
- Expand operations into new markets or regions
- Build or expand facilities and equipment

### How many types of stocks are there?

Stocks are divided into two main types: **Common Stock (Common Stock)** and **Preferred Stock (Preferred Stock)**.

**Common Stock (Common Stock)**
- Represents ownership in the company
- Grants voting rights in company decisions
- Holders can receive dividends, but the amount may vary based on performance
- Higher risk but potential for higher returns

**Preferred Stock (Preferred Stock)**
- Prioritizes holders over common shareholders regarding dividends and assets
- Usually pays fixed dividends, which are more stable than common stock
- Lower risk but less profit potential

### Other categories of stocks include:

**Growth Stock (Growth Stock)**
- Stocks of companies expected to grow faster than the market average
- Investors seek profit from capital gains
- These companies are often desirable because they are expected to expand their market share and enhance competitiveness in the coming years

**Value Stock (Value Stock)**
- Comes from established, stable companies
- Features consistent profitability, lower prices, and regular dividends
- Lower risk and less volatility than growth stocks, but with limited income-generating potential