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Understanding common stock and why companies issue them Print E-mail
By William

 Common stocks are the shares of a company, which large businesses and corporate issues to raise funds. Rarely some partnerships or trusts can also offer their shares, but only in special circumstances. Initially companys shares are held by a group of individuals but when some business is going through significant growth and it needs substantial capital, it can offer its shares to the general public and investors. Companies are said to be going public when they list themselves on some stock exchange.


Where to buy these common stocks:
Initial public offerings take place in primary markets. Original issuers will offer these stocks as financial claims to general public; in return of cash they receive from these investors. Sold shares are called issued and outstanding. Sometimes the company will purchase some of them back; these shares are kept in treasury and recorded as issued but not outstanding. After the IPO (Initial Public Offering) the shares (or stocks) are traded (repeatedly sold and purchased) in secondary markets. These secondary markets are normally known as stock exchange, for example The American stock exchange or
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