When a stock is
purchased, the ownership
of the shares may be
listed in one of two
ways. "Listed" means how
the corporation tracks
the ownership of their
stock. If you choose to
have the stock listed in
your name, you will
receive the actual stock
certificates.
Most investors choose
to have the ownership
listed in the broker's
name, called "held in
street name", with the
broker keeping track of
whose trading account
the stock actually
belongs to. The benefits
are reduced paperwork,
consolidated portfolio
statements, no concerns
about storing and
processing the paper
certificates, and the
ability to instantly
sell and transfer the
shares. Either way, any
dividends are credited
to your account.
Stocks held in street
name are insured up to
$500,000 by the federal
government against fraud
or financial failure of
the brokerage company.
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