Two Types of Stock
Stocks represent ownership of a business. A person who owns stocks is called a stockholder or a shareholder. A shareholder is a part-owner of a company. His shares define the ownership equity he has with a business.
There are two types of stock. The first type is the common stock. Common stock is common; when people talk about stock, they normally refer to common stock. Common stock features voting rights. One common share is equal to one vote. This vote can be used to choose and elect the members of the board of directors who supervise and oversee the decisions made by the top management of a corporation. Common stockholders can be paid dividends or not.
Preferred stock is the other type of stock. This stock does not carry on voting rights but it guarantees a dividend payout. Dividends are a fraction of the corporate earnings shared by owners to its shareholders. Preferred stockholders receive a fixed amount of dividends every year, but are not allowed to exercise voting rights. Preferred stocks can be convertible to common stock. These are called convertible preferred stocks which you can see how much they will convert for with stock analysis software.
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