A stock (or share) represents ownership in a company. When you own a stock, you own a “piece” of that company and may share in its profits (via dividends) or losses.

Common stock usually gives voting rights and variable dividends; preferred stock typically gives fixed dividends and priority in claims, but usually no voting rights.

Returns come via capital gains (selling the stock at a higher price) and dividends (periodic payments made by the company).

Dividends are payments made by a company to shareholders out of its profits, usually on a quarterly or annual basis.

A capital gain is when you sell a stock for more than you bought it for; a capital loss is when you sell for less.

Market cap = stock price × number of outstanding shares. It’s a measure of company size.

Categories of companies by market capitalization (large, medium, small).

Shares of large, well-established, financially solid companies with a history of steady performance.

Stocks that trade at a very low price per share (often under $5). They tend to be high risk and low liquidity.

A stock exchange is a marketplace (physical or electronic) where stocks are bought and sold (e.g. NYSE, NASDAQ).