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
- How Much Could Exelixis Really Be Worth?
- Why Tableau Software Shares Sank 4% Yesterday
- Nikkei Posts 700-Point Weekly Gain as Japanese Optimism Grows
- Apple Inc. May Have Made a Huge Mistake in Having Samsung Build the A9
- Why Fiscal 2016 Might Be an Uncomfortable One for Apple Inc. Shareholders
- Indian Stocks Fall to End Winning Streak