In this article, we will discus about Shares and Stocks. Happy Reading.
What is Shares?
A share is the single smallest denomination of a company’s stock. So if you’re divvying up stock and referring to specific characteristics, the proper word to use is shares.
What Is Common Stock?
Common stock is a security that represents ownership in a corporation. Holders of common stock elect the board of directors and vote on corporate policies.
An Overview Between Shares and Stocks
The distinction between stocks and shares in the financial markets is blurry. Generally, in American English, both words are used interchangeably to refer to financial equities, specifically, securities that denote ownership in a public company. (In the good old days of paper transactions, these were called stock certificates). Nowadays, the difference between the two words has more to do with syntax and is derived from the context in which they are used.
Of the two, “stocks” is the more general, generic term. It is often used to describe a slice of ownership of one or more companies. In contrast, in common parlance, “shares” has a more specific meaning: It often refers to the ownership of a particular company.
So if someone says she “owns shares,” some people’s inclination would be to respond, “shares in what company?” Similarly, an investor might tell his broker to buy him 100 shares of XYZ Inc. If he said “buy 100 stocks,” he’d be referring to a whole panalopy of companies—100 different ones, in fact.
See also : What is mutual fund and its advantages?
That comment “I own shares” might also spark a listener to respond even more generally, “Shares of what? What sort of investment?” It’s worth noting that one can own shares of several kinds of financial instruments: mutual funds, exchange-traded funds, limited partnerships, real estate investment trusts, etc. Stocks, on the other hand, exclusively refer to corporate equities, securities traded on a stock exchange.
|Basis for comparison||Stocks||Shares|
|Meaning||It is the larger form of a share.||It is a smaller unit of stock.|
|Relationship with the owner||When the owner owns the shares of several companies, we say that the owner owns stocks.||When the owner owns the shares of a particular company, we say that the owner owns shares.|
|Term||The stock is a generic term. When an owner owns stocks, we can’t specify them as shares of a particular company.||Share is a specific term. When the owner owns shares, we can ask about a particular company.|
|Example||Mr. A invests in stocks (this statement doesn’t require any further questioning).||Mr. B has invested in shares (then the next question would in which company, how many shares, what type of shares, etc.)|
|Macro & Micro||Stock can be compared to the automobile (industry).||Shares can be compared to the car (particular company).|
- The stock is a generic term. When we mention stock, we say it like this – “the investor invests in stocks.” Share, on the other hand, is quite specific. When we mention share, we say it like this – “Mr. U has bought shares of Tea Shop Inc..”
- Shares and Stocks. The stock is a macro concept. And the share is a micro concept. When we say stock, we cannot specify a particular investment. But when we say share, we mean a particular company. For example, if we understand the difference between the automobile and the car, we would be able to understand the differences between stock and share.
- To a layman who doesn’t go in the intricacies, will understand stock and share as the same thing, because there’s not much difference.
- The stock is generic, thus cannot be used when we talk about types. However, in the case of shares, we can have two types of shares – equity shares and preferred shares. And in the case of shares, we can also show they’re issued. The shares can be issued in three ways – at par value, at a premium, and at a discount.