What is the stock market? The Stock Market is either a private or public market where stock shares of the companies are sold or traded to potential investors. Known also as the equity market, it is considered as a very important sector in the market economy. It gives opportunity to the companies to accumulate greater capital while it offers the investors a potential gain in their investments that is also relative to the company’s future performance.
A stock share, a legal document from the company or simply referred as ‘stock certificates’, will entitle you to be a co-owner of that company. The stock certificates also indicate to the number of shares you owned.
Being a co-owner of the company, these will give you the opportunity to take part in the future profits of the company. Hence, the more number of stock shares you have, the higher the profit percentage you will earn.
One of the highlighted features in investing in Stock Market is the concept of unlimited liability. In a typical investments scenario, a company that loses any court cases is obliged to recompense the incurred cost and the implied penalties. With insufficient funds to pay, your personal assets will be subject to sequestration.
This is unlikely to happen to stock shareholders as you are bound for the unlimited liability. This implies that your personal assets will not be confiscated whenever such above unpleasant business situation happens. The only worst thing that can happen is that your stocks will be of no value anymore.
What is the stock market again? The Stock Market indeed offers a profound opportunity to be a shareholder for certain companies which in return escalates your investments provided you have opted for a reputable income generating companies.