Di Posting Oleh : Crew Blog
Kategori : 2016 COMMERCE FAQ FINANCE INVESTMENTS Q&A stock STOCK BROKERAGE STOCK EXCHANGE STOCK MARKET STOCK TRADING STOCKS
There can be a variety of stocks available in the stock market for a company depending on how the company's board and management had classified the ownership rules for its stock holders, but on an average at a very broad level, there exists at least two types of stocks available in the stock market for any company:
- Common Stocks
- Preferred Stocks
So what are the differences between a common stock and a preferred stock? Let us understand here:
What is a common stock?
Common Stock: This type of stock is what you will normally see being traded across the stock market. In a common stock, the owner of the stock usually gets a right to vote for the board or management decision for the direction in which the company will proceed in the future. The owner of this common stock will also get a part of the ownership of the company. In addition to this, the common stock owner may or may not also be given dividends by the company at regular intervals of time. However whether to give the dividend or not is entirely up to the company and its board members and the owners of the respective stocks will have no say or claim over getting this dividend.
What is a Preferred stock?
Preferred Stock: In case of a preferred stock, the owner of the preferred stock are assured of certain regular dividend from the company at regular intervals of time. On the other hand, the preferred stock owners will not have any voting rights on the company or board or management future decisions. In addition to this, the company can also offer the owners of the preferred stocks for a buy back scheme of the stocks back into the company, usually the offer rate for such preferred stocks is at a premium.
These are the two most basic stocks available in the market. In addition to this, as said earlier, each individual company may decide to further categorize their stocks into more classes and distribute the ownership and voting rights in a variety of other ways as they deem fit for the future and goals of the company.
