Common Stock Equivalent

AAA

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.



INVESTOPEDIA EXPLAINS '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.

VIDEO

RELATED TERMS
  1. Deferred Equity

    A type of security, such as preferred shares or convertible bonds, ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  4. Common Shareholder

    An individual, business or institution that holds common shares ...
  5. Ordinary Shares

    Any shares that are not preferred shares and do not have any ...
  6. Share Class

    A designation applied to a specified type of security such as ...
Related Articles
  1. A Primer On Preferred Stocks
    Bonds & Fixed Income

    A Primer On Preferred Stocks

  2. Introduction To Convertible Preferred ...
    Bonds & Fixed Income

    Introduction To Convertible Preferred ...

  3. Knowing Your Rights As A Shareholder
    Investing Basics

    Knowing Your Rights As A Shareholder

  4. Using Appreciative Inquiry To Solve ...
    Investing Basics

    Using Appreciative Inquiry To Solve ...

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center