stock (economics)

stock in finance, instrument certifying to shares in the ownership of a corporation. Bonds are similar evidences of shares in a loan to a corporation. Stock yields no dividends until claims of bondholders have been met. Preferred stock is entitled to dividends of a specified percentage per annum before common stock is entitled to any dividends; the common stock is then usually entitled to the rest of the profits. In case of liquidation of the company, holders of bonds and preferred stock take precedence over holders of common stock in the division of assets. Holders of common stock usually have voting rights in the management of the corporation; bondholders and, usually, holders of preferred stock have no voting rights. Since the value of common stock depends largely on its earnings, it is often issued with no par value. Public demand for securities and the need of corporations for ready capital have led to the development of stock exchanges in most of the major cities of the world (see stock exchange ).

stock
1. In the UK, a fixed-interest security (see gilt-edged security) issued by the government, local authority, or a company in fixed units, often of £100 each. They usually have a redemption date on which the par value of the unit price is repaid in full. They are dealt in on stock exchanges at prices that fluctuate, but depend on such factors as their yield and the time they have to run before redemption. See also tap stock.

2. The US name for an ordinary share.

3. The stock-in-trade of an organization. See inventory.

4. Any collection of assets, e.g. the stock of plant and machinery owned by a company.