Stock represents ownership in a company, shares are units of ownership, dividends are profits distributed to shareholders, capital gains arise from selling assets at a profit, and capital loss results from selling at a loss.
In the context of finance and investment:
Stock: A stock represents ownership in a company and constitutes a share in its assets and earnings. Investors purchase stocks to become shareholders and have a claim on the company's profits.
Share: A share is a unit of ownership in a company. When individuals buy shares, they acquire a proportional interest in the company's assets and earnings. Shareholders often have voting rights and may receive dividends.
Dividends: Dividends are payments made by a company to its shareholders as a distribution of profits. Companies that generate excess earnings may choose to distribute a portion to shareholders in the form of dividends.
Capital Gains: Capital gains refer to the profit realized when an investor sells an asset, such as stocks, for a higher price than the original purchase cost. It represents the positive difference in the asset's value over time.
Capital Loss: Conversely, a capital loss occurs when an investor sells an asset for a lower price than the purchase cost. It reflects a decrease in the asset's value from the time of acquisition.
Understanding these terms is crucial for individuals navigating the complexities of the stock market and investment landscape.