AskDefine | Define stock

Dictionary Definition

stock adj
1 repeated too often; overfamiliar through overuse; "bromidic sermons"; "his remarks were trite and commonplace"; "hackneyed phrases"; "a stock answer"; "repeating threadbare jokes"; "parroting some timeworn axiom"; "the trite metaphor `hard as nails'" [syn: banal, commonplace, hackneyed, old-hat, shopworn, stock(a), threadbare, timeworn, tired, trite, well-worn]
2 routine; "a stock answer"
3 regularly and widely used or sold; "a standard size"; "a stock item" [syn: standard]

Noun

1 the capital raised by a corporation through the issue of shares entitling holders to an ownership interest (equity); "he owns a controlling share of the company's stock"
2 liquid in which meat and vegetables are simmered; used as a basis for e.g. soups or sauces; "she made gravy with a base of beef stock" [syn: broth]
3 the merchandise that a shop has on hand; "they carried a vast inventory of hardware" [syn: inventory]
4 a supply of something available for future use; "he brought back a large store of Cuban cigars" [syn: store, fund]
5 not used technically; any animals kept for use or profit [syn: livestock, farm animal]
6 the descendants of one individual; "his entire lineage has been warriors" [syn: lineage, line, line of descent, descent, bloodline, blood line, blood, pedigree, ancestry, origin, parentage, stemma]
7 the handle of a handgun or the butt end of a rifle or shotgun or part of the support of a machine gun or artillery gun; "the rifle had been fitted with a special stock" [syn: gunstock]
8 the reputation and popularity a person has; "his stock was so high he could have been elected mayor"
9 a special variety of domesticated animals within a species; "he experimented on a particular breed of white rats"; "he created a new strain of sheep" [syn: breed, strain]
10 lumber used in the construction of something; "they will cut round stock to 1-inch diameter"
11 a certificate documenting the shareholder's ownership in the corporation; "the value of his stocks doubled during the past year" [syn: stock certificate]
12 any of various ornamental flowering plants of the genus Malcolmia [syn: Malcolm stock]
13 a plant or stem onto which a graft is made; especially a plant grown specifically to provide the root part of grafted plants
14 any of several Old World plants cultivated for their brightly colored flowers [syn: gillyflower]
15 the handle end of some implements or tools; "he grabbed the cue by the stock"
16 persistent thickened stem of a herbaceous perennial plant [syn: caudex]
17 an ornamental white cravat [syn: neckcloth]

Verb

1 have on hand; "Do you carry kerosene heaters?" [syn: carry, stockpile]
2 equip with a stock; "stock a rifle"
3 supply with fish; "stock a lake"
4 supply with livestock; "stock a farm"
5 stock up on to keep for future use or sale; "let's stock coffee as long as prices are low" [syn: buy in]
6 provide or furnish with a stock of something; "stock the larder with meat"
7 put forth and grow sprouts or shoots; "the plant sprouted early this year" [syn: sprout]

User Contributed Dictionary

see also stocks

English

Pronunciation

  • , /stɒk/, /stQk/

Etymology

stoc

Noun

  1. A store of goods ready for sale; inventory.
    We have a stock of televisions on hand.
  2. A supply of anything ready for use.
    Lay in a stock of wood for the winter season.
  3. Any of the several species of cruciferous flowers in the genus Matthiola.
  4. Farm animals (short form of livestock)
  5. (also rolling stock) Railroad cars.
  6. The capital raised by a company through the issue of shares. The total of shares held by an individual shareholder.
  7. The part of a rifle or shotgun that rests against the shooter's shoulder.
  8. A bar going through an anchor, perpendicular to the flukes.
  9. The axle into which the rudder is attached (rudder stock); it transfers the movement of the helm to the rudder.
  10. Broth made from meat or vegetables, used as a basis for stew or soup.
  11. The type of paper used in printing.
    The books were printed on a heavier stock this year.
  12. A wide necktie popular in the eighteenth century, often seen today as a part of formal wear for horse riding competitions.

Translations

store of goods for sale
supply of anything ready for use
genus of flowers
farm animals
rolling stock
shares of a company
part of gun
bar through an anchor
rudder stock
broth
type of paper
necktie

Verb

  1. To have on hand for sale.
    The store stocks all kinds of dried vegetables.

Translations

have on hand for sale

Adjective

  1. Normally available for purchase.
    stock items
    stock sizes
  2. Straightforward, plain, very basic
    That band is quite stock
    He gave me a stock answer

Translations

normally available for purchase

Dutch

Etymology

From stock.

Noun

nl-noun stocks
  1. stock, goods in supply
  2. basic capital
  3. shares (equity)

Derived terms

References

  • Koenen}}

French

Etymology

From

Extensive Definition

A share (also referred to as equity shares) of stock represents a share of ownership in a corporation.

Types of stock

Stock typically takes the form of shares of common stock (or voting shares). As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it typically does not carry voting rights but is legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders. Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Shares of such stock are called "convertible preferred shares" (or "convertible preference shares" in the United Kingdom).
Although there is a great deal of commonality between the stocks of different companies, each new equity issue can have legal clauses attached to it that make it dynamically different from the more general cases. Some shares of common stock may be issued without the typical voting rights being included, for instance, or some shares may have special rights unique to them and issued only to certain parties. Note that not all equity shares are the same. Apart from call options granted to employees, most stock options are transferable.

History

During Roman times, the empire contracted out many of its services to private groups called publicani. Shares in publicani were called "socii" (for large cooperatives) and "particulae" which were analogous to today's Over-The-Counter shares of small companies. Though the records available for this time are incomplete, Edward Chancellor states in his book Devil Take the Hindmost that there is some evidence that a speculation in these shares became increasingly widespread and that perhaps the first ever speculative bubble in "stocks" occurred.
The first company to issue shares of stock after the Middle Ages was the Dutch East India Company in 1606. The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families.
Economic historians find the Dutch stock market of the 1600s particularly interesting: there is clear documentation of the use of stock futures, stock options, short selling, the use of credit to purchase shares, a speculative bubble that crashed in 1695, and a change in fashion that unfolded and reverted in time with the market (in this case it was headdresses instead of hemlines). Dr. Edward Stringham also noted that the uses of practices such as short selling continued to occur during this time despite the government passing laws against it. This is unusual because it shows individual parties fulfilling contracts that were not legally enforceable and where the parties involved could incur a loss. Stringham argues that this shows that contracts can be created and enforced without state sanction or, in this case, in spite of laws to the contrary.

Shareholder

A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Companies listed at the stock market are expected to strive to enhance shareholder value.
Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors.
Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders.
Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other.
However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. For example, in California, USA, majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.
The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and especially passively managed exchange-traded funds.

Application

The owners of a company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use.
By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends.
In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company.
In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted - effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company.

Shareholder rights

Although ownership of 51% of shares does result in 51% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder.
In most countries, including the United States, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes:
''...it can safely be stated that there does not exist any publicly traded company where management works exclusively in the best interests of OPMI [Outside Passive Minority Investor] stockholders. Instead, there are both "communities of interest" and "conflicts of interest" between stockholders (principal) and management (agent). This conflict is referred to as the principal/agent problem. It would be naive to think that any management would forgo management compensation, and management entrenchment, just because some of these management privileges might be perceived as giving rise to a conflict of interest with OPMIs.''
Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can elect a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held and voted by insiders.
Owning shares does not mean responsibility for liabilities. If a company goes broke and has to default on loans, the shareholders are not liable in any way. However, all money obtained by converting assets into cash will be used to repay loans and other debts first, so that shareholders cannot receive any money unless and until creditors have been paid (most often the shareholders end up with nothing).

Means of financing

Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Unofficial financing known as trade financing usually provides the major part of a company's working capital (day-to-day operational needs). Trade financing is provided by vendors and suppliers who sell their products to the company at short-term, unsecured credit terms, usually 30 days. Equity and debt financing are usually used for longer-term investment projects such as investments in a new factory or a new foreign market. Customer provided financing exists when a customer pays for services before they are delivered, e.g. subscriptions and insurance.

Trading

A stock exchange is an organization that provides a marketplace for either physical or virtual trading shares, bonds and warrants and other financial products where investors (represented by stock brokers) may buy and sell shares of a wide range of companies. A company will usually list its shares by meeting and maintaining the listing requirements of a particular stock exchange. In the United States, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new so-called ECNs (Electronic Communication Networks like Archipelago or Instinet).
In the USA stocks used to be broadly grouped into NYSE-listed and NASDAQ-listed stocks. Until a few years ago there was a law that NYSE listed stocks were not allowed to be listed on the NASDAQ or vice versa.
Many large non-U.S companies choose to list on a U.S. exchange as well as an exchange in their home country in order to broaden their investor base. These companies have then to ship a certain amount of shares to a bank in the US (a certain percentage of their principal) and put it in the safe of the bank. Then the bank where they deposited the shares can issue a certain amount of so-called American Depositary Shares, short ADS (singular). If someone buys now a certain amount of ADSs the bank where the shares are deposited issues an American Depository Receipt (ADR) for the buyer of the ADSs.
Likewise, many large U.S. companies list themselves at foreign exchanges to raise capital abroad.

Arbitrage trading

Although it makes sense for some companies to raise capital by offering stock on more than one exchange, a keen investor with access to information about such discrepancies could invest in expectation of their eventual convergence, known as an arbitrage trade. In today's era of electronic trading, these discrepancies, if they exist, are both shorter-lived and more quickly acted upon. As such, arbitrage opportunities disappear quickly due to the efficient nature of the market.

Buying

There are various methods of buying and financing stocks. The most common means is through a stock broker. Whether they are a full service or discount broker, they arrange the transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed with a stock exchange, such as the New York Stock Exchange.
There are many different stock brokers from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a full service or discount broker.
There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. However, the initial share of stock in the company will have to be obtained through a regular stock broker. Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of brokers.
When it comes to financing a purchase of stocks there are two ways: purchasing stock with money that is currently in the buyers ownership, or by buying stock on margin. Buying stock on margin means buying stock with money borrowed against the stocks in the same account. These stocks, or collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock (collateral) to repay the borrowed money. He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account. Buying on margin works the same way as borrowing money to buy a car or a house, using the car or house as collateral. Moreover, borrowing is not free; the broker usually charges 8-10% interest.

Selling

Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order (short selling); although a number of reasons may induce an investor to sell at a loss, e.g., to avoid further loss.
As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction.
After the transaction has been made, the seller is then entitled to all of the money. An important part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis.

Stock price fluctuations

The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is directly proportional to the demand. However, there are many factors on the basis of which the demand for a particular stock may increase or decrease. These factors are studied using methods of fundamental analysis and technical analysis to predict the changes in the stock price. A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly correlated to the stock market value. Stock price is also changed based on the forecast for the company and whether their profits are expected to increase or decrease.

See also

Notes

stock in Catalan: Acció
stock in German: Grundkapital
stock in Modern Greek (1453-): Μετοχή (οικονομία)
stock in Esperanto: fundamenta kapitalo
stock in French: Marché boursier
stock in Korean: 주식
stock in Croatian: Dionica
stock in Dutch: aandeel
stock in Japanese: 株式
stock in Norwegian: Aksjekapital
stock in Portuguese: Ação (bolsa de valores)
stock in Russian: Акция (финансы)
stock in Swedish: aktiekapital
stock in Thai: หุ้น
stock in Vietnamese: Cổ phiếu
stock in Yiddish: סטאקס
stock in Contenese: 股票
stock in Chinese: 股票

Synonyms, Antonyms and Related Words

Animalia, Broadway, ability, abundance, acceptation, accepted, acception, accommodate, accumulate, accumulation, accustomed, acquiescence, affiliation, afford, allotment, allowance, amass, amassment, ancestor, ancestry, and fish, animal kingdom, animal life, animality, anthrophore, apparentation, appraisal, appraise, appraisement, array, assessable stock, assessed valuation, assessment, assets, assets and liabilities, assortment, assurance, assuredness, authorized capital stock, average, axis, back-number, backlog, banal, beasts, beasts of field, beasts of prey, begetter, beginning, belief, bewhiskered, big end, big game, bigger half, birds, birth, bisque, bit, bite, blood, bloodline, blue chip, blue chip stock, bole, borscht, bouillabaisse, bouillon, branch, breed, breeding, bromidic, brood, broth, brute creation, budget, burgoo, burlesque, butt, byword, byword of reproach, cache, cane, capacity, capital, capital stock, carnival, carpophore, carry, catalog goods, cattle, caudex, caulicle, caulis, certainty, chicken soup, chimney, chowder, chunk, chute, circumstances, circus, clam chowder, clan, class, clear soup, cliched, clothe, collect, collection, commencement, commissariat, commissary, commission, commodities, common, common ancestry, common stock, commonplace, community, conception, confidence, conformable, consanguinity, consomme, consuetudinary, consumer goods, consumer items, contingent, contribute, conventional, convertible preferred stock, cornucopia, corny, corporate stock, country rock, creator, credence, credit, credulity, culm, culture, cumulate, cumulation, cumulative preferred stock, current, current assets, customary, cut, cut-and-dried, cyclical stock, deal, deal in, defensive stock, deferred assets, deferred stock, deme, dependence, deposit, derision, derivation, descent, destiny, devices, dike, direct line, disposable resources, distaff side, dividend, dole, domestic animals, donate, drama, dump, dupe, dynasty, effects, egg drop soup, eighth stock, end, endow, entertainment industry, equal share, equities, equity, equity security, established, estimate, ethnic group, evaluation, everyday, extraction, fade, fair game, faith, familiar, family, fancies, fate, father, fauna, female line, figure of fun, filiation, fill, fill up, find, fish soup, fixed assets, floating stock, folk, fool, footstalk, forebear, forefather, forerunner, founder, frozen assets, fund, funds, funicule, funiculus, furnish, furry creatures, fusty, game, gangue, garner, garner up, gather into barns, gazingstock, gazpacho, genealogy, generally accepted, genesis, gens, give, glamour issue, goat, goods, goods for sale, grass roots, gravy soup, growth stock, guaranteed stock, gumbo, habitual, hackney, hackneyed, half, halver, handle, haulm, have, head, heap, heap up, helping, heritage, hide, high-flier, hoard, hoard up, hold, hope, horses, hot issue, house, household, hypothecated stock, inactive stock, inception, income stock, intangible assets, intangibles, interest, inventory, invest, investment, issued capital stock, jest, jestingstock, job lot, joke, judgment, julienne, keep, keep on hand, kind, kindred, larder, laughingstock, lay in, lay up, leafstalk, legit, legitimate stage, letter stock, line, line of descent, line of goods, lineage, liquid assets, livestock, loaned stock, lode, lodestuff, long stock, look at, lot, mail-order goods, maintain, make available, make provision for, male line, market, mass, material, material assets, material resources, materials, materiel, matriclan, matrix, matzo ball soup, means, measure, meed, merchandise, mess, method, mineral deposit, minestrone, misoshiru soup, mock turtle soup, mockery, modicum, moiety, monkey, moth-eaten, mulligatawny, munitions, musty, nation, nationality, nest egg, net assets, net worth, nonassessable stock, nonvoting stock, normal, normative, obtaining, off Broadway, off-off-Broadway, offer, old, old hat, order, ordinary, ordinary shares, ore bed, origin, original, origination, ownership, oxen, oxtail soup, pale blue chip, parentage, part, participating preferred stock, patriclan, pay dirt, pedicel, pedigree, peduncle, penny stock, people, percentage, petiole, petiolule, petiolus, phratry, phyle, phylum, piece, pile, pile up, plant kingdom, platitudinous, playland, plenitude, plenty, popular, portion, pot-au-feu, potage, potage au tomate, potato soup, pottage, power, precursor, predominating, preference stock, preferred stock, prepare, prescribed, prescriptive, present, prevailing, prevalent, process, procure materials, progenitor, property, proportion, protective stock, provenience, provide, provide for, provisionment, provisions, puree, put up, quantum, quarter stock, quick assets, quota, race, radical, radix, rails, rake-off, range, ration, rations, raw material, received, reception, recourses, recruit, reed, regular, regulation, reliance, reliance on, repertoire, repertory, repertory drama, replenish, reserve, reservoir, resorts, resources, reverse split, review, rick, rise, root, roots, routine, run-of-the-mill, save, save up, seasoned stock, secrete, seed, seedstalk, segment, selection, sell, sept, set, share, share ledger, shares, sheep, shoot, short stock, show biz, show business, side, sideline, size up, slice, small game, small share, society, soup, source, spear, spear side, special situation stock, specialty stock, species, speculative stock, speech community, spindle side, spire, split, square, squirrel, squirrel away, stack, stage world, stagedom, stageland, stake, stale, stalk, standard, standard stock, staple, staples, steels, stem, stereotyped, stipe, stirps, stock ledger, stock list, stock split, stock up, stock-in-trade, stockpile, stocks, store, store up, stores, strain, straw, strawhat, strawhat circuit, stuff, subsidize, substances, succession, summer stock, supplies, supply, supply on hand, support, sureness, surety, suspension of disbelief, sword side, take stock, tangible assets, tangibles, taproot, target, ten-share unit stock, the boards, the footlights, the scenes, the stage, the theater, theater world, theatromania, theatrophobia, thick soup, thin soup, threadbare, tigella, time-honored, timeworn, tired, tomato soup, totem, toy, trade in, traditional, treasure, treasure up, treasury, treasury stock, tribe, trite, truistic, trunk, trust, turtle soup, unissued capital stock, universal, unoriginal, usual, utilities, utilize, variety, vaudeville, vegetable soup, vein, vendibles, vernacular, vichyssoise, victim, voting stock, wares, warmed-over, ways, ways and means, wealth, well-known, well-worn, wherewith, wherewithal, widespread, wild animals, wildlife, won ton soup, wonted, worn, worn out, worn thin, yield
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