When you buy shares in a company you become a partial owner of that company, hence the term equity. Equity means that part of something that you own. Thus, if you have a mortgage on your house then the part of the house that you own is your equity.

Since you own a piece of the company you are entitled to a piece of the action. That action involves

• the right to share in the after-tax earnings of the firm after the payment of prior claims such as bond interest and preferred share dividends,
• the right to share in the growth of the earnings and assets of the company,
• the right to vote and elect directors, and to attend company meetings,
• the right to examine certain company records, and
• the right to sell your share of the company.

The market place where people buy and sell their shares in the company is called a Stock Market. So the logical place to begin an examination of the Stock Market is to begin with a business