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 per cent of the company. They are bought and sold through any of the four 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.