A stock is a share in the ownership of a company. This stock represents a claim on the company's assets and earnings. The more shares you own the greater your ownership stake in the company becomes. (Shares of stock and ownership equity mean the same thing.)
As a shareholder you are generally one of the many owners of a company. This means that you have a claim to what the company owns. Granted what you get may be in small by comparison to what board members and executive mangers receive, you are still owed a portion of the earnings.
As a shareholder you can expect to be compensated in two primary ways:
- If the price per share increases in the future you are able to sell your shares for a profit.
- If the company earns money you may be paid income in the form of a dividend.
A stock is represented by a stock certificate. This certificate is proof of your ownership in the company. Though, today, you rarely get an actual stock certificate, in most cases the brokerage firm keeps them or records them electronically.
As a stock owner you have limited liability and you are not personally liable if the company is not able to make good on its debts. The maximum value you can lose is the value of your investment. This holds true even in the event of a company bankruptcy.