tailieunhanh - 10 Minute Guide to Investing in Stocks Chapter 5

Lesson 5. The Five Types of Stock. In this lesson you will learn how the goals of stock and the conditions of their issuing companies are described using Wall Street terms. Companies, like almost anything else, are available for purchase and sale. | l@ve RuBoard PREVIOUS NEXT k Lesson 5. The Five Types of Stock In this lesson you will learn how the goals of stock and the conditions of their issuing companies are described using Wall Street terms. l@ve RuBoard 4 PREVIOUS I NEXT k l@ve RuBoard PREVIOUS NEXT Stock Characteristics Companies like almost anything else are available for purchase and sale. Your daily newspaper certainly covers the more noteworthy purchases such as AOL s recent purchase of Time Warner. In addition however and on a much smaller scale individuals can purchase a franchise restaurant like McDonald s a small bed and breakfast or the local corner store. Even professional practices such as a dentistry or professional massage parlor are usually sold when the proprietor retires or leaves the profession. As these businesses vary so does the accompanying stock. Over the years investors have come up with descriptive names to characterize the differences between these stocks. This is not meant to imply that all stocks bear little resemblance to each other. In fact stocks actually tend to be more similar in most aspects. For example all horses are basically the same four legs one mane and so on. A race horse however varies from a plow horse primarily because of what the owner expects from it namely a race horse will try to win races and a plow horse will pull a plow. As a result the horses would differ in what they would be fed what kinds of ailments would be more common to each and how they would be treated. So too most stocks have particular aims that define them. One stock may attempt to provide higher dividends while another may focus on higher capital gains and yet another may focus on raising quick money for the issuing company immediately. Due to these differing focuses companies will treat their stocks accordingly in order to maximize the stock s ability to meet their goals. Goals are usually determined when a stock is first issued by the company in what is known as an initial public .