Stock Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Stock, written in plain English, along with examples of how it is used.
What is Stock?
(n) Stock is the collection of goods, inventories, merchandise, capital split in to shares, cattle etc kept and maintained for the purpose of using them as tradable goods directly or after processing them to finished products
History and Meaning of Stock
Stock refers to the ownership of a corporation, represented in units of ownership called "shares." Historically, corporations needed to raise capital to fund their operations or expansion; they would accomplish this by selling shares of stock to investors. The investors become shareholders of the corporation and own a portion of its business, assets and earnings.
Stock trading dates back to the 17th century where share trading began on the Amsterdam Stock Exchange. Over time, stock trading evolved and became a way for companies to raise funds and for people to invest in businesses.
Examples of Stock
- Jane owns 100 shares of Apple stock.
- John bought 50 shares of Amazon stock.
- The corporation issued 1,000 shares of stock.
- The stock market crashed in 1929.
- The company's stock price rose by 10% after a positive earnings report.
Legal Terms Similar to Stock
- Shareholder - an individual, entity or institution that owns shares of a corporation's stock.
- Securities - a general term for financial instruments that represent ownership (equity) or debt obligations.
- Bond - a debt security in which an investor loans money to a company or government.