Candlestick Trading Blog
November 24, 2009
Stock Classes
| Two Types of Stock Classes In today’s article we will discuss two types of stock also referred to as two types of “stock classes.” Common Stock – common stocks are the majority of stocks. When people are talking about stocks, they are most likely referring to common stocks because most stock is issued in this form. To own shares in this type of stock means that you own shares in a company and you can claim a portion of the profits in dividends. These dividends are variable and they are not guaranteed. Investors who own shares in stock classes of this type vote per share and they get to elect the board members who represent the company when making important decisions regarding the company’s well-being. These board members actually oversee those important decisions that are made by managers of the company. This type of stocks actually yields higher returns than almost any other type of investment so it shouldn’t surprise you that is comes with higher risk as well. Shareholders of this type of stock have to wait to receive any money in the even of bankruptcy after all creditors, preferred shareholders, and bondholders do. Preferred Stock – preferred stocks also represent ownership in a company like common stocks, however stock classes of this type do not have the same voting rights. Preferred stock holders are typically guaranteed a fixed dividend forever instead of relying on variable dividends that are not guaranteed. These shareholders are also paid before the common shareholders however they still have to wait for debt holders to be paid in the event of bankruptcy. Holders of this type of stock also have the option to buy shares from other shareholders. They can purchase these shares for any reason and at any time but they are typically bought at a premium. Most investors consider preferred stocks to be between common stocks and bonds. There are other different stock classes that can actually be determined by companies. For instance, different classes of shares can be given different voting rights. What this means is that a certain group of investors can be given more than one vote per share while others may only be given one vote per share. Continue to learn about the different classes of stock and about the stock market in general. This is only the beginning of the vast amount of knowledge surrounding the stock market and other markets. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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