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
- Can You Buy Your Next Home With No Money Down?
- The Most Disappointing Clinical Failures in 2014
- Why Do High-Yield Stocks Like American Realty Capital Bring Out Bad Executive Behavior?
- How Many Credit Scores Do You Have, and Which One Matters Most?
- 3 Large Cap Biotech Stocks That Could Surprise Investors in 2015
- 5 Crazy Habits You Might Adopt With Low-Cost Genome Sequencing