1. The income a stockholder receives from a joint-stock company on the basis of his or her shares is a dividend. Dividend distribution depends on the company's dividend policy, and if the company does not pay dividends, shareholders have no right to receive dividends. Preferred shareholders are entitled to a fixed amount of dividends, while dividends for common shareholders are related to the company's profits. Dividends for common stockholders are paid after preferred stockholders, and all preferred stockholders must receive the full amount of dividends they had been promised before common stockholders have the right to pay dividends. Stocks are merely certificates of ownership of real capital owned by a stock corporation, certificates of participation in corporate decision-making and claims for dividends, and are not real capital, but only an indirect reflection of the movement of real capital, thus representing a form of virtual capital.
2. In stock investment, there are often times when the real rise and fall of the stock price does not match the expected rise and fall of the phenomenon, in which case the investor may not be able to obtain the expected return, and may even suffer losses. Risk refers to the deviation between actual and expected returns. Risk can be categorized into systematic risk and unsystematic risk. Expected return, also known as desired return, is the return that would have been predicted based on known information if no unforeseen events had occurred. Systematic and unsystematic risk in the equity market can be described by the Capital Asset Pricing Model (CAPM) where beta (β) reflects systematic risk and alpha (α) reflects unsystematic risk. Beta reflects the sensitivity, or elasticity, of an equity asset's return to market volatility. Alpha reflects the level of excess return on a stock, with positive alpha being positive outperformance and negative alpha being negative outperformance.