Common stock is a share of ownership in a company that comes in the form of a security. People who own common stock have equity in the company. The more stock that a person owns in a company, the larger his or her percentage of ownership. Holders of common stock have voting rights when it comes to electing a board of directors for the company.
In the context of the law, people who purchase stocks become legal shareholders in the business.
People purchase common stock as a way of investing in a business. If the value of the stock goes up, then the person who owns the stock makes a profit of the difference between the new price and the price he or she bought the stock at.
However, even though common stock can be a very lucrative investment, stockholders can also lose money if the value of the stock dips beneath the price they purchased it at. Stocks are traded throughout the world on a number of different stock exchanges.