Understanding Stock Part One

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Did economics hurt your head in grade school? Do you believe that Dow Jones is a person? Well, then you will like my beginner's course on stocks, a four part article series outlining the very basics of what stocks are all about. Shall we begin?

In essence, the stock of a business represents the original amount of capital that went into founding it. Since a business' stock can not be withdrawn to the disadvantage of its creditors, it serves as a security to them. When a new company is being created, the stock of this business is divided into shares, and each share will have a particular declared face value that depends on the total amount of money that was invested in the businesses. Shares represent a fraction of ownership in a business, and there may be different types of shares with different ownership rules, privileges or share values.

Generally stock will take the form of shares of common stock or preferred stock. Common stock is a unit of ownership and usually comes with voting rights that can be used in corporate decisions. Preferred stock usually doesn't come with voting rights but people who own preferred stocks are legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.

The rules and perks of stocks can vary though; some shares of common stocks can be issued without typical voting rights, or some shares might have special rights unique to them that are given only to specific parties. Preferred stock might have qualities of bonds blended in with common stock voting rights in addition to preference in the payment of dividends over common stock.

Any type of financial instrument whose value depends on the price of its underlying stock is called a stock derivative. The two main types of stock derivatives are futures and options. Stock futures are contracts where the buyer is long, or when they take on the obligation to buy the stock, and the seller is short, or when they take on the obligation to sell the stock. A stock option is the right to buy stock in the future at a fixed price (a call option) and the right to sell stock in the future at a fixed price (a put option). So, you can see that the value of a stock future and a stock option changes as the value of the stock it is derived from fluctuates. To Be Continued In Part Two

Mallory Megan works for Rapid Recovery Solution and writes articles on commercial collection agencies.

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Comments on Understanding Stock Part One

November 10, 2010

rentquicktwo @ 7:23 pm #

Bad Day for Mortgage Rates. Expecting Recovery Rally Soon: Welp. There's that short term spike in mortgage rates…

November 29, 2010

peaceful133 @ 10:01 am #

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December 15, 2010

livinglies @ 10:18 am #

JC: If you have perfected a lien, then you need to go through post-judgment collection process. You will need to follow your state law and levy it or foreclose on it. If you don't get paid, then levy on a GMAC mortgage that they claim to be the owner of. Just go down to the courthouse and see which cases have GMAC and of those which ones do they claim ownership. Then assuming you have a judgment, you garnish the mortgage. Then you work out a new mortgage with the homeowner (assuming they have the means). I strongly suggest that the re-structured loan follow this model: 80% LTV (loan to value), 5%, 30 year fixed, 5-10 year balloon payment. So say you have a $50,000 judgment lien perfected against GMAC. You find another unrelated case where they claim to be the "lender" or in any event the "owner" of the loan. Let's say the note in the other case is $200,000 and the property is worth $90,000 now. After you get control of the mortgage, you execute a new mortgage with the distressed homeowner for $72,000, 5%, 30 year, fixed rate, with a 5 year balloon which means they need to refinance or sell their property within the 5 years. You ALSO file a friendly quiet title action against the homeowner and record a final judgment quieting title to the homeowner subject to your encumbrance (the new mortgage). If the homeowner cannot qualify for any mortgage, then you work out a 90-day period for vacation of the premises in which they something toward rent and do the same deal suggested here with a new homeowner. By reducing the principal to reflect reality, sale the of the property is no longer impossible — it is likely.

December 16, 2010

caldabbik @ 12:55 am #

I successfully located a debtor using MicroBilt's Trace Detail Report as a skip tracing tool to verify address.

Gijoeextreme @ 2:26 pm #

gee, that must mean it is very cheap if one can afford to buy an extra phone just to use in disneyland.? funny that. well i also think tracfone is most affordable. i have got the $19.99 plan, double minutes for life and i splashed out on a nice phone, the t301 slider with camera and bluetooth. i use it all the time, not only in disneyland, and i love it's simple usage and the great nationwide coverage with no extra charges for long distance

January 16, 2011

VoiceinRecovery @ 9:22 am #

Interest rate rise could wreck recovery, economists warn

January 17, 2011

Nieuwsmeninguk @ 9:40 am #

Mortgage: Mortgage Bankers Face A Cold Spring: With mortgage rates starting to tick up, a recovery underwa…

February 12, 2011

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February 18, 2011

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February 23, 2011

jtm0514 @ 3:10 pm #

Bad credit?!? Haha like that's going to be a deterrent to anyone marrying Chris

February 24, 2011

No NDP @ 11:43 am #

Jack boot feminists, population decline ( secular women are reproducing at 1.3 yet continue to support infanticide) the politically correct media ( Toronto Star and CBC ) have set the frame work for a society which is rapidly being replaced. While our aging secularists, party less and less due to longer recovery rates, the new energized prolific feminists, who wear burkas and veils, are leaving the old infertile feminist for a destination with fate-the glue factory.

March 9, 2011

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April 6, 2011

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April 15, 2011

#tcot - Twitter Search @ 7:58 pm #

Steven, no it's not like blaming someone for getting mugged, it's like blaming someone for making a bet on the losing team at 5 seconds to the buzzer. They made a decision that was absolutely idiotic.

April 17, 2011

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May 22, 2011

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May 27, 2011

Executive Briefing- Canadian Stock Option Changes that affect your company and employees –

June 5, 2011

Well, I just took at it's face value – which of course the media can and usually does exaggerate face value.
I JUST got done reading an article about using grey water for landscaping, I had never thought of that! I could do that myself – I don't know about using washing machine water – is the detergent in it safe for plants? Still, it's a great idea and one I'll be looking into seeing how hard it would be to implement into a couple of patches of plants on my property.
ben

June 7, 2011

Mustang Forums at StangNet @ 3:57 pm #

http://www.squidoo.com/stephen… Wanna Get Rich? Groupon Files for IPO – Daily deal site to sell stock; part of a tech bubble?

June 21, 2011

Derivative Report- June 21, 2011 – Angel Broking, India Research #tip #India #stock

June 28, 2011

chinscratch @ 8:21 pm #

Family guy? Dude, that was in grade school shortly after cavemen invented grade school.

And while Winehouse is not easy to look at, I had Palladia (MTV's HD station) on in the background while I was doing housework the other day as they played one of her concerts and was surprised to find that she really does have a voice. Granted, she sang old-school R&B and ska, so it doesn't fit in with most pop radio, but she does have talent.

August 4, 2011

Minnesota Jobs @ 7:29 am #

HealthEast – Saint Paul, MN – St Joseph's Hospital – St. Joseph’s Hospital, of downtown St. Paul, was also named a Solucient Top 100 hospital. Providing the latest technology and having outstanding recovery rates, the staff takes a team approach to providing quality and compassionate patient care. Specialties include services at the National Brain Aneurysm Center, Heart Care, and treating inoperable tumors with the revolutiona

Twitter @ 11:34 am #

Indications: Futures point to U.S. bounce; earnings, data await: U.S. stock futures rose Wednesday after ADP Emp…

August 7, 2011

DCCC Chairman Steve Israel’s Statement on the 46th Anniversary of the Voting Rights Act –

August 27, 2011

Top Stock Photo: Types of Stock Photography

December 1, 2011

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December 21, 2011

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December 30, 2011

egmCarTech @ 1:25 pm #

Exclusive – Fairly big news from the Canadian accommodation rentals space today: we've learned that iStopOver has acquired Vacapedia, a one-stop-shop site for vacation rentals and short-tem accommodations. The deal size was not disclosed, but the transaction is part stock, part cash. iStopOver is essentially acquiring Vacapedia's assets, its global inventory and its distribution network. Ashwin Kedia, CEO of Vacapedia, will serve as an advisor to the company.

February 6, 2012

ambalalresearch @ 5:59 am #

GoldenStockOption: Stock Market Opening News: The segments in NSE are Intraday Cash, Intraday Stock future, Intr…

April 8, 2012

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