How do you differentiate Stock from a Share? (Stock)
Stock is the capital raised by a company.
An individual or group of investors will be operating a business by putting their share of money. When the company is entering in to a new project, sometimes there might be shortage of funds and the already existing investors might not be able or might not be willing to invest the extra funds. To raise the required funds for the project, the company issues stocks (ownerships) for that project.
By issuing shares of ownership, the company is selling a percentage ownership of the company in the public market to raise capital (stock) for the company’s investment requirements.
When you buy a share of the ownership sold for stock, you purchase a small percentage of the ownership of everything that the company owns.
Stock and shares are different entities; however, communication has confused the terminologies to the extent that stock is considered as a share and share is considered to be stock, but in reality:
- Stock is the fund raised for the company.
- Share is one unit of account for the stock that you purchase. One stock is divided in to 1000 shares or so. And you buy 5 shares, 10 shares or 1000 shares per your capability.
One stock is divided in to said number of shares. You buy shares from the stock!
