Stocks are shares of ownership in a company. A company issues stock for startup capital or to help pay for other activities. Stock is also referred to as "equity."

There are two main types of stock: common and preferred.

Common stock is the most basic form of ownership in a company. It typically gives shareholders the right to vote on issues and a percentage share of ownership. For example, if you own one share of common stock in a company that has 100 shares, you own 1% of the company.

Preferred stock usually does not offer voting rights, but owners of preferred stock are generally entitled to dividends (the company's profits distributed in cash) before common stockholders. Preferred stockholders generally receive dividends at specific times and in pre-determined amounts, whereas common stockholders may or may not receive dividends based on company profits.

Investors can make money on stock by either receiving a dividend from the company or by selling stock for a higher price than was paid for it. This is called "capital appreciation."

Risks and returns vary, depending on the economy, political scene, the company's performance and other market factors.

Investing involves market risks, including possible loss of principal.

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