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,单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,2014/5/8,#,Unit 9,Stocks Basics,The Definition of a Stock,Para 1,Plain and simple,stock is a share in the ownership of a company.Stock represents a claim on the companys assets and earnings.As you acquire more stock,your ownership stake in the company becomes greater.Whether you say shares,equity,or stock,it all means the same thing.,Being an Owner,Para 2,Holding a companys stock means that you are one of the many owners(shareholders)of a company and,as such,you have a claim(albeit usually very small)to everything the company owns,.Yes,this means that technically you own a tiny sliver of every piece of furniture,every trademark,and every contract of the company.As an owner,you are entitled to your share of the companys earnings as well as any voting rights attached to the stock.,Para 5,The management of the company is supposed to increase the value of the firm for shareholders.If this doesnt happen,the shareholders can vote to have the management removed,at least in theory.In reality,individual investors like you and I dont own enough shares to have a material influence on the company.Its really the big boys like large institutional investors and billionaire entrepreneurs who make the decisions.,Para 6,For ordinary shareholders,not being able to manage the company isntsuch a big deal.After all,the idea is that you dont want to have to work to make money,right?,The importance of being a shareholder is that you are entitled to a portion of the companys profits and have a claim on assets,.Profits are sometimes paid out in the form of dividends.The more shares you own,the larger the portion of the profits you get.,Your claim on assets is only relevant if a company goes bankrupt.In case of liquidation,youll receive whats left after all the creditors have been paid.This last point is worth repeating:,the importance of stock ownership is your claim on assets and earnings.Without this,the stock wouldnt be worth the paper its printed on.,Para 7,Another extremely important feature of stock is its limited liability,which means that,as an owner of a stock,you are not personally liable if the company is not able to pay its debts.,Other companies such as partnerships are set up so that if the partnership goes bankrupt the creditors can come after the partners(shareholders)personally and sell off their house,car,furniture,etc,.Owning stock means that,no matter what,the maximum value you can lose is the value of your investment.Even if a company of which you are a shareholder goes bankrupt,you can never lose your personal assets.,Risk,Para 8,It must be emphasized that there are no guarantees when it comes to individual stocks.Some companies pay out dividends,but many others do not.And there is no obligation to pay out dividends even for those firms that have traditionally given them.Without dividends,an investor can make money on a stock only through itsappreciation in the open market.On the downside,any stock may go bankrupt,in which case your investment is worth nothing.,Para 9,Although risk might sound all negative,there is also a bright side.Taking on greater risk demands a greater return on your investment.This is the reason why stocks have historically outperformed other investments such as bonds or savings accounts.Over the long term,an investment in stocks has historically had an average return of around 10-12%.,Different Types of Stocks,Para 10,There are two main types of stocks:common stock and preferred stock.,Common Stock,Para 11,Common stock is,well,common.When people talk about stocks they are usually referring to this type.In fact,the majority of stock is issued is in this form.Common shares represent ownership in a company and a claim(dividends)on a portion of profits.Investors get one vote per share to elect the board members,who oversee the major decisions made by management.,Para 12,Over the long term,common stock,by means of capital growth,yields higher returns than almost every other investment.This higher return comes at a cost since common stocks entail the most risk.If a company goes bankrupt and liquidates,the common shareholders will not receive money until the creditors,bondholders and preferred shareholders are paid.,Preferred Stock,Para 13,Preferred stock represents some degree of ownership in a company but usually doesnt come with the same voting rights.(This may vary depending on the company.)With preferred shares,investors are usually guaranteed a fixed dividend forever.This is different than common stock,which has variable dividends that are never guaranteed.Another advantage is that in the event of liquidation,preferred shareholders are paid off before the common shareholder(but still after debt holders).,Preferred stock may also be callable,meaning that the company has the option to purchase the shares from shareholders at anytime for any reason(usually for a,premium),.,Para 14,Some people consider preferred stock to be more like debt than equity
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