Stock

Stock is a type of financial security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings. There are two main types of stock: common stock and preferred stock.

Common Stock

Common stock is a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common shareholders are on the bottom of the priority ladder for ownership structure. In the event that a company goes bankrupt and is liquidated, common shareholders are the last to receive any remaining funds.

Preferred Stock

Preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

Stock Market

The stock market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly-held companies take place. Such financial activities are conducted through institutionalized formal exchanges or over-the-counter (OTC) marketplaces which operate under a defined set of regulations.

Stock Exchange

A stock exchange is a market where stock brokers and traders can buy and sell shares of stock, bonds, and other securities. Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividends.

See Also

• Bond (finance)
• Share (finance)
• Dividend
• Equity (finance)

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