Thursday, September 15, 2016

Stock Definition

Stock Definition

‘Companies’ and ‘Shares’ with limited liability were devised during the colonial period to mitigate high risk and uncertainty involved in the seafaring ventures. Shares enabled raising huge sums required to fund expeditions from many small investors and limited liability protected the investors from creditors accessing their personal properties in case of a failed venture. Thus a share is ownership of a company into a tiny unit or block.

With the advent of stock exchanges the shares got listed on the exchanges bringing a great amount of liquidity to shares.

Stock is a term used to describe shares in general while the word share is used in the context of a particular company. For example you own shares of NMDC Ltd. or SJVN Ltd. You also own stocks of a great number of Indian companies.

It is not uncommon, at least in India that the two terms stocks and shares are used interchangeably.

A Share of 'The Empire Jute Company Limited"

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