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Definition of 'Stock'

A stock, also known as a share or equity, is a type of security that represents ownership in a company. When a company wants to raise capital, it can issue stocks to the public, which are then bought and sold on a stock exchange. When an individual buys a stock, they become a shareholder in the company, which means they own a small percentage of the company's assets and have a claim to a portion of its profits.

Stocks can come in different forms, such as common stock and preferred stock, and can have different voting rights and dividend payments associated with them. Common stock usually entitles shareholders to vote on important company decisions, such as the election of the board of directors, while preferred stock typically offers priority in dividend payments over common stock.

The value of a stock is determined by the forces of supply and demand in the stock market, as well as by the performance and financial health of the company issuing the stock. The stock price can go up or down based on a variety of factors, including market conditions, company earnings, news, and events, among others.

Investing in stocks can be risky, as the value of a stock can fluctuate rapidly and unpredictably. However, stocks can also offer the potential for high returns, making them a popular investment option for individuals looking to build long-term wealth.

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