what is stock and It’s types?

You love to be become a business owner without showing up at work. Only you want sit back and watch how your company grow and collect the money from company. Probably, you have guessed. That, here we are talking about the owning the stocks. But, You should be knew. In actually, “What is stock“. This is one of the greatest tool to become an financial freedom. But when you start on your road to financial freedom, You need to have a solid understanding of stocks. In Actually, what is stock. From this article you may be cleared that what is stock.

What is stock?

Defination:- In Plain and simple

Stock is a share in the ownership of the company. As you acquire more stock more is ownership in the company. And your ownership stake in the company becomes greater. Stock represent claim on the company’s earning and states. Even if you say shares, equity or stock it’s all means the same thing that is stock.

Also, In related to shares

Stock refers to the aggregate of fully paid-up shares centralize and dividend into different parts. stock may be split up into fractions of any amount irrespective of the original face value of the shares. A company limited by shares may convert  all or any of its fully paid-up shares into stock. It may also reconvert the stock into fully paid shares of any denomination. However, this can be done only when the articles of association of the company authorise and a resolution is passed in the general meeting of shareholders.

Types of stocks ,there are two main types of stocks:-

(i)  Common Stock

(ii) Preferred Stock

What is Common stock? 

Common stock is cleared by name means these stocks are common. When people talk about stocks they usually referring to the common stock. In fact, The majority of stocks of any company is issued in this form.

 

Common stock Represent ownership in a company and claim on a portion of company profits. Investors have right to get one vote per share to elect the board members, who oversee the major decisions made by management.

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source: boundless.com

 

 

Over the long term, The common stocks yields higher return than every other investment. The higher return in common stocks comes at a cost of higher risk. In which  can lost his all investment. That’s by the common stock investors yield high return on this. In any how the company goes bankrupt and liquidate, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid first.

What is preferred stock? 

Preferred stocks is a class of ownership in the company. Preferred stocks have higher claim on assets and earning than the common stocks. But they come with no voting rights. There is an advantage in preferred stocks that is in the event of liquidation and bankruptcy preferred shareholders are paid off before the common shareholder( after the debt holders).

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source: thebalance.com

Preferred stock combines features of debt in that it pays fixed dividends and equity in that it has the potential to appreciate in price.The details of each preferred stock depend on the issue.

Some people consider preferred stock to be more like debt than equity. A good way to think of these kinds of shares is to see them as being in between bonds and common shares.

Stocks are very worst things. Many more information will be given in future first retain that’s knowledge.

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