The words stocks and shares are sometime used interchangeably. This is however not strictly correct since a stock and a share is not exactly the same thing, although they are connected since you trade a stock but buy shares. The stock is simply put the entire business (although a business can be divided into several types of stocks who together make up the company) while a share is a single piece of that company. The stock is divided into shares. As an example, if you look at the trading rate of Intel in the newspaper and you decide to buy into that company, you will buy shares in that company.

The usage of the word stocks to mean shares rather than the more correct stock is gaining more widespread use and less and less people protest against such a usage. It is safe to assume that stocks within short will be universally accepted as a synonym for shares.

It should be mention that in British English as well as in Ireland, South Africa and Australia, the word stock can referrer to other financial instruments than shares, e.g. bonds.

A single company can have several types of stock and some or all of these can be listed for trading. The most common types of stock are common stock, preferred stock and voting stock. The first two types are the most common in the United States while the voting stock is common in Europe and especially in Scandinavia. The common stock is just what the name suggest, common, regular stock.

Preferred stock

Preferred stock are stock that usually have no voting power but will receive a higher dividend. These shares can sometimes be converted to common stock at the owners request or is automatically converted on a certain date. If they are to convert on a certain date it is common for the owner to be able to convert them earlier if he or she so prefers. Preferred shares that can be converted is commonly known as convertible preferred share or – in British English – convertible preference shares.

Voting stock are stock with a higher voting power than regular stock. They are usually associated with 10 times the voting power of a regular share but it can be more or less. In many countries, 10:1 is the highest permitted difference in voting power.


Convertibles are sometimes referred to as stock despite technically not being stock. A convertible is a loan to the company where the owner receive an interest and have an option to convert the loan into shares at a predetermined price. This option might be open at any time or at the time the convertible expires.

Share value

The value of a share is decided by many factors and not just the underlying financial situation. This makes it hard to know the exact present and future value of a share, and this is why share prices can rise and decline rapidly and why the market mood can have such a high impact on stock market prices. The presence of a bear or bull market will therefore greatly affect the valuation for a, simply due to the psychology of the investors. The value of the underlying financial, or face value of a share (sometimes referred to as per value) can differ greatly from the trading price of the stock. This is true even if you factor in forecasts.