Most beginning investors get confused about the various kinds of stocks.
Some people chose to stay away from the stock market while others make poor investments.
Knowing the various kinds stock is necessary if you want to make the stock market a good place to invest your funds.
You should be able to tell what stocks are available and how they are significant.
A kind of share that is available to anyone and can be purchased by anyone is known as common stock or ordinary shares.
The age, income, or financial standing of the investor doesn't matter.
Ordinary stock is a form of part ownership in the company.
The value of common stocks depends on the value of the company.
Your stock rises in value as the company grows and your share loses its value when the company goes bankrupt.
Holders of common stocks is not included in the operations of the company but have the power to influence the company through votes.
They can vote on policies, board of directors and other company related decisions.
There are also different classes of stocks which are usually created inside a company.
The higher class stock allows for the owner to have more votes per share than the owner of the lower class stock.
Preferred stocks differ to ordinary shares in that it has no voting rights but is entitled to receive dividends before any other share holders.
It is also a much more affluent than common stocks.
It can be said that preferred stocks to both a share and a bond.
The shareholder has rights to claim assets from the company when it goes bankrupt.
The company can also legally buy back the shares and stop paying dividends to the owner.
There is also an option to owners to convert their preferred stock to a fixed number common stock shares know as convertible preferred stock.
This can be done any time after a predetermined date.