...TRADING STOCKS Stock trading has become one of the most popular and efficient ways to make money since it is easy to access and it could bring a lot of money back to investors. With some extra money, anyone can purchase stocks from a company or corporation and make profit. A stock is basically a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings. There are two main types of stock: common and preferred. Common stock usually entitles the owner to vote at shareholders' meetings and to receive dividends. Preferred stock generally does not have voting rights, but has a higher claim on assets and earnings than the common shares. Owning a stock means that a stockholder (person that owns the stock) has a claim to a part of the corporation’s assets and earnings. We could say that shareholders are owners of a corporation. Ownership is determined by the number of shares a person owns relative to the number of outstanding shares. The higher number of stocks a person owns, the more benefit he/she will get. People that purchase stocks would have the following advantages and disadvantages: Advantages: -They would be able to gain a large amount of money -The potential loss from stock purchases with cash is limited to the amount of the initial investment. -Stocks offer limited legal liability -Most stocks are very liquid (they can be bought and sold quickly at a fair price) -Investment diversification (purchasing...
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