Define stock and also discuss its important characteristics-00153
This subjective question is related to the book/course
vu bt301 Introduction to Biotechnology.
It can also be found in
vu bt301 Mid Term Solved Past Paper No. 2.
Question 1: Define stock and also discuss its important characteristics.
Important characteristics
Answer:
Stock
This also known as common stocks or equity , are shares in a firm's ownership.It is the key instrument for holding personnel wealth as well as diversify, this also spread and reduce risk which we face. This is one of the way for companies to obtain the finance.
Stocks and stock market are the main link between financial world and real economy. Stockholder are also entitled to vote at firm's annual meeting such as voting to elect or remove the firm's board of director.Important characteristics
- A large number of shares are out standing.
- Price of individual shares are low.
- Shareholder can replace managers who are doing bad.
- Due to limited liability investor only losses do not exceed the amount they paid.
- An individual share represents only small fraction of value of the company.
- This allow individual to make relatively small investment.
- Stockholders receive he proceeds of a firm's activities only after all other creditors are paid.
