Stocks
Stocks represent shares of ownership in a corporation. They are traded on exchanges or over-the-counter markets, and their prices fluctuate based on supply and demand, company performance, and broader economic conditions. There exist two types of stocks:
- Common stock gives shareholders voting rights and the potential for capital gains (by earning variable dividends), but they are last in line during liquidation.
- Preferred stock generally provides fixed (or no) dividends and priority in dividend payments and liquidation, yet typically does not offer voting rights.
Companies issue stock to raise capital for expansion, funding operations, or debt repayment, and private firms may do so through multiple rounds (e.g., Seed, Series A, B, C) before going public. After an initial public offering (IPO) in the primary market—where newly issued shares are sold directly to investors—public companies can also raise more capital with a follow-on public offering (FPO), and their shares then trade on secondary markets like the NYSE or Nasdaq.
Privately Held Stocks not listed on public exchanges, so they are typically owned by a small group of individuals, founders, or private investors. Because they are not publicly traded, these shares are often less liquid and more difficult to value than publicly traded stocks.
Privately held stocks are shares of companies that are