Stock Market Trading
Common and proffered stocks (also called common and preferred shares) are the most commonly traded types of shares in the stock market. Common stocks (common shares) represent a degree of ownership in the corporation. The degree of ownership is equal to the number of voting shares held in relation to the total number of the company's voting shares that have been issued.
Common stock owners have the right to vote on questions that affect the corporation in proportion (percentage) to the number of shares that they hold. The election of the directors of the corporation is a responsibility and right of the common shareholders as well. The board of directors of the corporation represents the common shareholders' interests when making major decisions for the company. Still, some types of common stocks may have limited voting rights or no voting rights at all.
The majority of investors come to the stock market for the purpose of making a profit when the price of the shares rises. However, no matter which type of common shares is owned, the common shares provide additional income through dividends that are paid to the shareholders in proportion to the number of shares that they hold.
In case of the company's (corporation's) liquidation, common shareholders have a right to the company's assets in proportion to their degree of ownership. They may exercise this right only after the claims of creditors, bondholders, debt holders and preferred shares holders have been satisfied.
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