Stocks, also known as equities or shares, represent ownership in a company and are a fundamental component of financial markets. When an individual buys a stock, they are purchasing a small ownership stake in that company. Companies issue stocks to raise capital for various purposes, such as expanding their business, investing in new projects, or paying off debts. Stockholders have the potential to benefit from the company's success in the form of capital appreciation and dividends. Capital appreciation occurs when the stock's price increases over time, allowing investors to sell their shares at a higher value than the purchase price. Additionally, some companies distribute a portion of their profits to shareholders in the form of dividends, providing a steady income stream. However, investing in stocks carries risks, as stock prices can fluctuate based on market conditions, economic factors, and company performance. Investors often diversify their portfolios to spread risk across different stocks and sectors, aiming for long-term growth and financial stability.