Common stock
Common stock is the type of stock that represents a small piece of ownership of a company. Ownership of common stocks, which are also sometimes called shares, typically includes the right to vote on the company directors and company policies. Companies issue common stock to raise money to fund company growth. During periods of high growth, a company may choose to split it's stock, converting each piece of stock into two or three shares, so that the company has more common stock available to sell. Individuals buy common stock as an investment, often planning to sell it when the stock price rises. Some companies pay out dividends on common stock, so investors can also ...
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Common stock
Common stock is the type of stock that represents a small piece of ownership of a company. Ownership of common stocks, which are also sometimes called shares, typically includes the right to vote on the company directors and company policies. Companies issue common stock to raise money to fund company growth. During periods of high growth, a company may choose to split it's stock, converting each piece of stock into two or three shares, so that the company has more common stock available to sell. Individuals buy common stock as an investment, often planning to sell it when the stock price rises. Some companies pay out dividends on common stock, so investors can also make money this way.
Most stocks that people buy and sell on the stock market are considered common stock. The other form of stock is preferred stock, which offers regular dividend payments but does not provide voting rights for the holder of the stock. In the long run, common stock typically provides a higher rate of return than preferred stock.
If the company goes bankrupt, holders of common stock may receive a payout, but creditors, bondholders, and the holders of preferred stock get paid before common stock holders. Business.com provides more information about common stock. Learn more by checking out the links on this page.
