Stocks
Stocks represent a share of ownership, or equity, in a corporation.
For example, if you buy 10,000 shares in a company with 1
million shares outstanding, you own 1 percent of the company.
They are bought and sold through any of the three major exchanges
in Canada: the Toronto Stock Exchange (TSE), the Montreal
Stock Exchange (MSE) and Canadian Venture Exchange (CDNX)
in Calgary. Purchases are handled through licensed brokers
in securities firms. Some financial institutions facilitate
on-line trading by individual investors. There are two types
of brokerage firms:
Discount Brokerage: A brokerage that charges less
than a full-service brokerage because it does not offer investment
advice from analysts and brokers. Typically, discount brokers
buy and sell stocks for their customers without recommending
choices. However, they may offer general investment advice
as well as news and some other services. They usually offer
their services over the phone, the Internet, and at their
offices.
Full-Service Brokerage: The most traditional type
of brokerage. It offers advice on building portfolios, on
the types of securities to buy and sell, and asset allocation.
In general, full-service brokerages charge higher commissions
in exchange for this advice.
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