Erica is considering investing in stocks and wants to understand the key concepts of stocks, dividends, and exchange-traded funds (ETFs).

A stock, also known as a share or equity, represents ownership in a company. When you own a stock, you own a small piece of the company and are entitled to a portion of its profits and assets. Stocks can be bought and sold on stock exchanges and their value is determined by supply and demand. The value of a stock can rise or fall based on various factors such as the financial performance of the company, market conditions, and the overall economy.

A dividend is a portion of a company's profits that is paid to shareholders. Dividends can provide investors with a regular source of income and can also be a sign of a company's financial stability. Dividends can be paid in cash or in additional shares of stock. Companies may choose to pay dividends to attract and retain investors, and they may also increase or decrease the dividend amount over time.

An ETF, or exchange-traded fund, is a type of investment that holds a basket of stocks, bonds, or other assets. ETFs trade on stock exchanges like individual stocks and provide investors with exposure to a variety of assets in a single investment. ETFs offer a convenient and cost-effective way for investors to diversify their portfolios and gain exposure to different market segments.

In conclusion, stocks, dividends, and ETFs are three important concepts for anyone considering investing in the stock market. Each offers its own unique benefits and risks, and it is important for investors to understand these concepts before making any investment decisions. Investors should carefully consider their investment goals, risk tolerance, and overall financial situation before investing in stocks, dividends, or ETFs.