Stock is a type of security that
signifies ownership in a company. And the other definition of stock is a type
of security which published by company to public. If you have a stock in a
company, it means that you are also as owner or stockholder a part of that
company. Stock has two types : Common Stock and Preferred Stock.
Common stock is the most popular stock
in capital market. Why? Because, investors who own common stock will get
dividend if company get the profit. But, if the company in bad situation,
investors can’t get dividend. People who have stocks in a company has the right
to take a part in manage the company, accordance with the franchise that they
have based on a total the stocks that they have. Common stocks are typically
voting and allow holders to “vote” on issues like electing the board of directors
or other issues put to a vote. This is not always the case, however, so it may
be important to refer to specific features of a class of shares you are
investing in.
Preferred Stockholders have a greater
claim to a company’s assets and earnings. Preferred Stock often doesn’t have
voting rights and don’t provide an ability to participate in the appreciation
in the value of company. Preferred Stockholders typically have first access when
it comes to dividends and also in a bankruptcy situation, after creditors are
paid preferred stockholders will be compensated before common stockholders.
