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Question

What are stocks and shares?

Answer

Stocks and shares are also known as equities or common stock.  A Stock is ownership, or equity, in a company.  Investors buy stock in the form of shares, which represent a portion of a company's assets and earnings (capital).  As a stockholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available.

Your stake may authorise you to vote at the company's annual general meeting, where shareholders usually receive one vote per share.  In reality, however, most private investors' stakes are insignificant and many do not attend the annual general meeting and their votes revert to management in the form of proxy votes.

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