Stock and Their Salient Features



Finance is the backbone of everything. Sometimes when the word finance comes to our mind we picture a nation with big organizations, developed roads, buildings and modern people. With cash comes comfort and progress. People not only in big government organizations or private enterprises, but even in simple households strive for the betterment of their financial condition. Often, for middle class people it is not enough to survive with hard earned monthly income. Such people opt for many secondary measures to earn some extra bucks.
Among many such tried ways is the easy method of buying stocks or shares from big organizations with the goal of earning fair dividend. 

The Need for the Process
  1. People always feel secure with the presence of abundant cash.
  2. Apart from the concept of cash in abundance, there are many needy people who are unable to sustain livelihood properly even after a whole months hard work.
  3. A source of supplementary income always comes handy in critical situations.
  4. Organizations or enterprises require cash for various projects and their execution.
  5. They definitely take loan from financial institutions but a safer way is to obtain ready cash with the promise of some fair dividend.
  6. This is done via the process of giving away stocks or shares to individuals in lieu of promising dividends.
  7. The advantage lies in the fact that ready cash is always available for any kind of business expansion purpose or project development purposes. 
  8. Thus, both organizations and individuals become dependent upon one another. 


The Process Includes
·         Stock
In case of big organizations stock constitutes the claim or interest due by the investors. As, these investors invest money, they have the right towards left over assets of the company.  Generally, the organizations pay liabilities to the stock holders. In case the liabilities surpass the assets there is also the provision for negative equity.

·         Shares
The stocks are often subdivided into shares. The shares are owned by shareholders. A particular shareholder can be the owner of one or more number of shares, the other number of shares is generated by the company itself. Shares also decide the ownership of a particular business. In many countries the shares of a particular stock are provided with par values. But, this is not always necessarily the case, cause in many other places shares are given without any par value.

·         Different Types of Stocks

There are two types of stocks

Common Stock
This is the most common form of stock. Often issued to employees on behalf of organizations it gets directly affected by the profit and loss which the organization faces. It sounds very risky but the prominent part lies in the fact that huge amount of dividend can be earned as this type of stock is not associated with any fixed dividend system.

Preferred Stock
Unlike common stock in case of preferred stock there is fixed dividend. Here, the shareholders are paid dividend timely.
Apart, from this though stakeholders associated with common stocks receive huge or sound dividend yet preferred stock is considered safe because in case of any kind of financial crisis the common stock holders as stated above face problems. But the preferred stakeholders do not get affected by the situation as their invested amount of money is returned back to them.


Author’s Bio: Alisa Martin, is a regular blogger, and have been authoring articles on various finance topics for the past decade. She is a regular contributor to www.idealkash.com.

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