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Common Stock

Reviewed by Vineeth | Updated on Sep 30, 2020

Catalogue

Introduction

Common stocks are securities that depict the ownership of a firm. Common stockholders exercise their power by voting on corporate policy and choosing directors.

Understanding Common Stock

If companies with common stock go bankrupt, then the holders of common stocks will not receive any money until preferred shareholders are paid and creditors have recovered the debt. It is reported in the company's balance sheet, under the equity section.

Factors to Consider

  1. Common stocks are held by owners of the company.

  2. Common stocks are riskier when compared to preferred shares.

  3. Common stockholders may not get any money when the company is liquidated.

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