The stock is a paper asset or an asset class called as Equity.
The stock is an asset wherein capital is raised by the company or corporation via Initial Public offering (IPO). The methods of subscription of shares for the expansion of the business are IPO or FPO.
IPO – The Initial public offer is when a company wants to go public to raise funds from public.
FPO -The follow on public offer is for existing share holders or institutions. A company wishes to raise more funds by selling promoter holdings by FPO.
The fund is raised by the issuance of Equity or shares or stocks in the later stages to grow the business towards next level.
Thus, the shareholders who have subscribed and/or owns the shares would become share holder of the company.
There are different step by step process involved in the business expansion of the company. The fund is raised as per the needs of the company to expand their business.
In the next article, let’s discuss about the other asset classes in detail.