Final answer:
A share of stock represents ownership in a company. Firms receive money from a stock sale in their firm during an initial public offering. Dividends are payments made by a company to its shareholders. Capital gain is the profit earned when an investment is sold for a higher price.
Step-by-step explanation:
A share of stock represents ownership in a company. When someone buys a share of stock, they are essentially buying a small piece of the company and becoming a partial owner. This ownership entitles the shareholder to certain rights, such as voting in company decisions and receiving dividends.
Firms receive money from a stock sale in their firm when they issue new shares of stock and sell them to investors. This is known as an initial public offering (IPO). However, when shares of stock are bought and sold on the stock market between investors, the firm does not receive any money.
A dividend is a payment made by a company to its shareholders as a share of the company's profits. It is typically given in cash, but can also be paid in the form of additional shares of stock.
A capital gain is the increase in the value of an investment, such as stocks, bonds, or real estate, compared to its purchase price. It is the profit earned when the investment is sold for a higher price than it was originally purchased.