WHAT IS A STOCK?
Plain English
Buying a stock is like buying a tiny slice of a business. If you own a share of Apple, you literally own a fraction of the company, its factories, its cash, and its future profits.
Going deeper
A stock (also known as equity) represents fractional ownership in a corporation. When a company wants to raise money to grow, it can borrow it (bonds) or sell pieces of itself to the public (stocks). Shareholders have a claim on part of the corporation's assets and earnings. The primary ways investors make money from stocks are through capital appreciation (the stock price goes up) and dividends (the company pays out a portion of its profits to shareholders). Stocks are traded on exchanges like the NYSE and NASDAQ.
Examples
The Lemonade Stand
You want to start a lemonade stand but need $100. You only have $50. You ask a friend for $50, offering 50% ownership. If the stand makes $200 in profit, you each get $100. Your friend owns 'stock' in your stand.
Public Company Share
Company XYZ goes public and issues 1 million shares at $10 each. You buy 100 shares for $1,000. You now own 0.01% of XYZ. If the company's total value doubles, your 100 shares are worth $2,000.