What are the TYPES OF STOCKS

CHAPTER 3
TYPES OF STOCKS
There are generally 2 types of Stocks.
COMMON STOCK: A common stock also known as Voting share or an Ordinary share gives the right to the shareholder to vote on the corporate matters .policy and to elect the Board Members. Mostly the companies issue Common stocks. The dividend paid on these stocks is not fixed and would vary. The return on the Common stocks is much higher than in any other investment, but this return are with cost as common stock involves maximum risks. If the company goes bankrupt or chooses to close down Common stock holders are only paid after the preferred shareholders, bondholders and the creditors are paid. The biggest benefit of a common stock is its can be converted in cash, that is can be liquidities very fast.

PREFERED STOCK : A Preferred stock is also known as known as Preference share or Preferred share, is a higher ranking stock then the Common stock, and its terms are negotiated between the company and the investor. Preferred stock generally does not carry a voting rights but it does carry priority over the Common stock in payment of dividend and upon liquidation. A Preferred stock holder has option to convert his stock to common stock after predetermined dates, which are called CONVERTIBLE PREFERRED SHARES.