Common Stock

Common stock

Securities that represent equity ownership in a company. Common shares let an investor vote on such matters as the election of directors. They also give the holder a share in a company's profits via dividend payments or the capital appreciation of the security. Units of ownership of a public corporation with junior status to the claims of secured/unsecured creditors, bondholders and preferred shareholders in the event of liquidation.

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Common Stock

Stock in a publicly-traded company that entitles holders to vote in the annual meeting, to elect the board of directors, and to generally exercise control of the company. While common stockholders are important in terms of their level of control, they have the least precedence in the event of liquidation. That is, if the company goes bankrupt, common stockholders do not receive any money until all bondholders, other debt holders, and preferred shareholders are paid in full. Likewise, common stock is not entitled to a guaranteed dividend. Common stock is also called ordinary stock.

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common stock

A class of capital stock that has no preference to dividends or any distribution of assets. Common stock usually conveys voting rights and is often termed capital stock if it is the only class of stock that a firm has outstanding (that is, the firm has neither preferred stock nor multiple classes of common stock). Common stockholders are the residual owners of a corporation in that they have a claim to what remains after every other party has been paid. The value of their claim depends on the success of the firm. See also callable common stock, common stock equivalent, puttable common stock.

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Common stock. When you own common stock, your shares represent ownership in the corporation and give you the right to vote for the company's board of directors and benefit from its financial success.

You may receive a portion of the company's profits as dividend payments if the board of directors declares a dividend. You also have the right to sell your stock and realize a capital gain if the share value increases.

But if the company falters and the price falls, your investment could lose some of or all its value.

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Common Stock

What Does Common Stock Mean?

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 if a company fails. In the case of liquidation, common shareholders get paid after bondholders, preferred shareholders, and other debtholders. In the United Kingdom, common stock is called ordinary shares.

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 shares of the leftover assets. In the event of liquidation, this makes common stock riskier than debt or preferred shares. However, historically, common stock has outperformed bonds and preferred shares in the long run.

Related Terms:
• Equity
• Initial Public Offering—IPO
• Marketable Security
• Preferred Stock
• Shareholders' Equity

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Common Stock

Shares in the ownership of a corporation that are entitled to residual dividends, after bonds and preferred stock have first received interest and dividends. A common stockholder usually has a vote in deciding company affairs, including the election of a corporation's board of directors.