common stock
common stock
English Definitions:
common stock, common shares, ordinary shares (noun)
stock other than preferred stock; entitles the owner to a share of the corporation's profits and a share of the voting power in shareholder elections
"over 40 million Americans invest in common stocks"
common stock (Noun)
Shares of an ownership interest in the equity of a corporation or other entity with limited liability entitled to dividends, with financial rights junior to preferred stock and liabilities.
Common stock
Common stock is a form of corporate equity ownership, a type of security. The terms "voting share" or "ordinary share" are also used in other parts of the world; common stock being primarily used in the United States. It is called "common" to distinguish it from preferred stock. If both types of stock exist, common stock holders cannot be paid dividends until all preferred stock dividends are paid in full. In the event of bankruptcy, common stock investors receive any remaining funds after bondholders, creditors, and preferred stock holders are paid. As such, common stock investors often receive nothing after a bankruptcy. On the other hand, common shares on average perform better than preferred shares or bonds over time. Common stock usually carries with it the right to vote on certain matters, such as electing the board of directors. However, a company can have both a "voting" and "non-voting" class of common stock. Holders of common stock are able to influence the corporation through votes on establishing corporate objectives and policy, stock splits, and electing the company's board of directors. Some holders of common stock also receive preemptive rights, which enable them to retain their proportional ownership in a company should it issue another stock offering. There is no fixed dividend paid out to common stock holders and so their returns are uncertain, contingent on earnings, company reinvestment, efficiency of the market to value and sell stock.
Common stock
Common stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently outside of the United States. They are known as equity shares or ordinary shares in the UK and other Commonwealth realms. This type of share gives the stockholder the right to share in the profits of the company, and to vote on matters of corporate policy and the composition of the members of the board of directors. The owners of common stock do not own any particular assets of the company, which belong to all the shareholders in common. A corporation may issue both ordinary and preference shares, in which case the preference shareholders have priority to receive dividends. In the event of liquidation, ordinary shareholders receive any remaining funds after bondholders, creditors (including employees), and preference shareholders are paid. When the liquidation happens through bankruptcy, the ordinary shareholders typically receive nothing. Since common stock is more exposed to the risks of the business than bonds or preferred stock, it offers a greater potential for capital appreciation. Over the long term, common stocks tend to outperform more secure investments, despite their short-term volatility.
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"common stock." Kamus.net. STANDS4 LLC, 2024. Web. 26 Apr. 2024. <https://www.kamus.net/english/common+stock>.
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