What are stocks?

Hello Deriv Community Members,

Stocks, also known as equities, represent ownership of a fraction of the issuing company. Shares are units of stocks put together. Shares entitle the owner to a proportion of the company’s assets. Companies issue stocks to raise funds to operate their businesses. Stock trades must abide by government regulations meant to protect investors from fraudulent practices.

An owner of the issuing company is called the shareholder. If a corporation has 1,000 shares of stock outstanding and one person owns 100 shares, that person would own and have a claim to 10% of the company’s assets and earnings.

Owning stocks gives you the right to vote in shareholder meetings, receive dividends if and when they are distributed, and the right to sell your shares to somebody else. The more shares you own, the higher your voting power. The more shares you own, the larger the portion of the profits you get. However, ordinary shareholders do not manage the company.

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