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Definition of 'Common Stock'
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 stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders have been paid in full.
In the U.K., these are called "ordinary shares".
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Investopedia explains 'Common Stock'
If the company goes bankrupt, the common stockholders will not receive their money until the creditors and preferred shareholders have received their respective share of the leftover assets. This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run.
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Not all shares are created equal. Learn about the different types here.
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Offering both income and relative security, these uncommon shares may work for you.
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We delve into common stock owners' privileges and how to be vigilant in monitoring a company.
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