Common stock is a security that represents ownership in a company.
Common stock confers on its owners equity in a company, which includes voting rights and a share of the company's profits through dividends and/or capital appreciation. Common stockholders usually receive one vote per owned share to elect members of the company's board of directors.
Common stock has the least priority when it comes to ownership in the company. When a company is liquidated or restructured, common shareholders often receive little or nothing after creditors, debt holders, and preferred shareholders are paid. Because of this, common stock is riskier than bonds or debt, but they typically return more than either bonds or debt.
Recent Mentions on Fool.com
- These Companies Have Turned Losing Money Into a Science
- Your Complete Guide to the 529 Plan
- Why El Pollo Loco Holdings, Inc. Stock Fell 17% in September
- Is It Time to Buy Lumber Liquidators Holdings Inc.?
- Winners and Losers of Eli Lilly's CETP Drug Failure
- International Business Machines Corp Breaks New Ground With Cognitive Computing Unit