Bob Brinker's Marketimer

  Tuesday November 21, 2017

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TYPES OF STOCK
Learn even more about this topic with the Encyclopedia of Personal Finance™

There are two basic kinds of stock:

Common stock is the kind most investors own. When you own common stock, you generally receive voting rights, and you receive dividends if and when the company's board of directors decides to pay them. If the company were to be sold, common stockholders would have the right to a share of the value of the company's assets—that is, if any are left after the company pays off creditors, bond holders, and owners of preferred stock.

Preferred stock is called "preferred" for that reason—its owners have a prior claim to the company's assets over the owners of common stock. Preferred stock usually doesn't include voting rights, and it pays a fixed dividend. As a result, while preferred stock pays off in a predictable manner, its holders do not share in the company's changing fortunes in the way common stockholders do. For that reason, preferred stock isn't preferred by most investors!

Before you receive any benefits from stock, you have to buy it—and perhaps sell it—first. Let's look at how stocks are traded, next.




LEARN EVEN MORE WITH THE ENCYCLOPEDIA OF PERSONAL FINANCE. CLICK HERE!

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