Series 7
Equities - Common stock
Now that you have some grounding in equities in general, let's focus on the easier material first and discuss common stock.
What is Common Stock?
Common stock is a simple ownership interest in a publicly traded corporation. It gives the holder four distinct rights. A shareholder can do the following:
What is Common Stock?
Common stock is a simple ownership interest in a publicly traded corporation. It gives the holder four distinct rights. A shareholder can do the following:
- Transfer ownership of her shares to someone else by sale or gift.
- Inspect the company's books, records, minutes from shareholders' meetings and similar items of interest.
- Preempt, that is, maintain a proportionate share of ownership by purchasing a proportionate share of any new stock issued.
- Vote on a company's important affairs, such as electing the board of directors or determining corporate policy.
- This last right can be delegated to another person, known as a proxy.
- In rare instances, classes of stock are issued as non-voting shares; buying these implies complete faith in corporate management.
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