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29 Jan 2020

There are two types of stocks

  1. Common Stock

  2. Preferred stock.

Common stock:

Common Stock is an investment security that represents the ownership of a company. For example, To a very close person, you say that he owns stock of a particular company then that stock is called common stock in types of stocks.

Where Total Return = Income received from investment + Any change in its value

Features of Common Stocks

  • The right to receive dividend payments typically from earnings. If allowed by the board of directors.

  • The power to sell the stock (liquidity rights) and realize capital gains on public trading markets or in private transactions. If there are willing buyers.

  • The right to receive consideration in a merger or other fundamental transaction. If...

18 Dec 2019
Equity shares

We also know equity shares as ordinary shares. These shares have voting rights. Equity share is a main source of finance for any company giving investors the right to vote, share market profits and claim on assets.
We know a share that is not a preference share as equity share. It doesn’t offer a fixed rate of return. They don’t get a fixed rate of dividends. It entitles the whole of the profit of a company to these equity shareholders, only after paying a fixed dividend to preference shareholders.
Advantages of equity shares are it is a permanent source of capital gain and the company has to repay it except under liquidation.
With profits, equity shareholders are the real gainers with increased dividends and appreciation...