Two types of Stocks - Shares

Two types of Stocks - Shares
Common shares also come with voting rights.
Allows the shareholders of a company to vote

• specific corporate actions,
• elect members to the board of directors, C-level executives like chief executive officers (CEOs)
• approve issuing new securities or payment of dividends.
  Common shares often have greater potential for capital appreciation because their value is directly tied to the company's performance and growth prospects.

3. Resources/Finance/Stocks/The voting rights of Common Shares does make sense

Preferred shares typically do not offer much market appreciation in value or voting rights in the corporation. However, this type of stock typically has set payment criteria, like a dividend paid out regularly, making the stock less risky than common stock.

Because preferred stock takes priority over common stock if the business files for bankruptcy and is forced to repay its lenders, preferred shareholders receive payment before common shareholders but after bondholders. This priority treatment reduces the risk even further compared to common shares.

Preferred shareholders are entitled to receive a fixed dividend rate, which is typically higher than the dividend paid to common shareholders. The company must pay preferred dividends before paying dividends to common shareholders.

Created: 2023-07-25 Tags: #literature Link: What Are Shares -- How They Compare to Stocks