Common Stock

Common stock represents ownership shares in a company, giving shareholders voting rights and potential dividends, though it sits below preferred stock in liquidation priority.

Characteristics:

• Voting Rights: Typically, one vote per share on company matters.

• Dividends: Paid after preferred shareholders and only when declared.

• Capital Appreciation: Value tied to company performance and market valuation.

• Liquidation Rights: Lowest claim in the event of company dissolution.

Importance:

• Forms the foundation of equity financing for most businesses.

• Allows companies to raise capital without incurring debt.

• Offers investors potential for higher returns compared to fixed-income instruments.