A share of stock represents actual ownership in a company. Consider this very simplified example: Imagine that Home Surgery Kits, Inc. (ticker: OUCHH) has 10,000 shares outstanding -- in existence. If you own 100 shares of OUCHH, you own 1% of the company. (Divide 10,000 by 100 and you'll get 100. So, you own 1/100th of the firm.)

Of course, most companies have many more shares than that. Dell (NASDAQ:DELL), for example, sports some 2.4 billion shares, while Kellogg (NYSE:K) has roughly 400 million, Starbucks (NASDAQ:SBUX) has around 770 million, General Electric (NYSE:GE) has some 10.5 billion, and General Dynamics (NYSE:GD) has around 200 million. (Remember that the number of shares alone gives you very little insight into the company's actual worth.)

Ownership entitles you to share in the company's earnings. These are sometimes partially paid out to shareholders in the form of dividends. Instead of or in addition to dividends, earnings may also be reinvested into the company, to fuel growth and generate more value.

With most shares of common stock, voting rights accompany ownership. That's right -- when a company you hold shares in has a big decision to make, it will ask you what you think. Individual investors typically buy "common stock" in a company. Another form of stock is "preferred," which usually carries some extra conditions and often excludes voting rights.

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