Common Stock Equivalent


DEFINITION of 'Common Stock Equivalent'

Securities such as stock options, warrants, preferred bonds, two-class common stock and contingent shares that can be converted into common stock. Sometimes preferred stock can also be converted to common stock.


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BREAKING DOWN 'Common Stock Equivalent'

Also called common shares or ordinary shares, common stock is what most people buy when they invest in a stock. It typically gives them the right to vote on corporate issues in proportion to their ownership in the company and the right to receive dividend payments. Common stock may be subdivided into class A shares and class B shares, which can have different voting and dividend rights. The other type of stock is called preferred stock, and its holders receive priority over common stock holders when dividends are paid and in the event the company liquidates.

  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  2. Deferred Equity

    A type of security, such as preferred shares or convertible bonds, ...
  3. Ordinary Shares

    Any shares that are not preferred shares and do not have any ...
  4. Common Shareholder

    An individual, business or institution that holds common shares ...
  5. Share Class

    A designation applied to a specified type of security such as ...
  6. Common Stock

    A security that represents ownership in a corporation. Holders ...
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