What Is the Difference Between All the Different Types of Stocks & Symbols for the Same Company?
Original post by Robert Rimm of Demand Media
Public corporations issue various forms of stock to meet specific internal requirements and to satisfy public demand. From initial public and secondary offerings to different classes of stock, companies access the public markets to raise funds for expansion and debt repayment, as well as to allow original investors and owners to cash out and diversify their portfolios. Each of the different types of stock represent a form of ownership.
Most corporate shares issued to the public take the form of common stock, which entitles the holders to dividends where applicable and voting rights for the board of directors. For successful companies, common stock generally yields greater returns than other forms of company ownership. Conversely, it also represents the most risk, as common stock takes a lower priority than corporate bonds, preferred shares and company creditors. Shares on the New York Stock Exchange (NYSE) come with symbols of one, two or three letters, including F for Ford and GE for General Electric. The electronic NASDAQ exchange issues four-letter symbols, such as AAPL for Apple Computer.
Preferred stock conveys ownership in a corporation and takes priority over common stock if a company must liquidate or declare bankruptcy. Although it comes with little or no voting rights, the accompanying dividend is traditionally higher than that for common stock. It can also be callable, which gives the company the right to repurchase the shares at a fixed price within a future time period. The NYSE incorporates the letters "PR" within the symbols for preferred shares, while other exchanges use the "-P" suffix.
Companies wishing to give extra or different voting rights to a certain group of shareholders can choose to issue different classes of stock. Class A stock typically comes with extraordinary voting ability; holders may have 10 votes for every share they own. This class is generally reserved for insiders, family members and founders who want to retain control of the company without owning a majority of the stock. Class A shares add either 'a' or '.A' to the symbol.
When a company issues more than one class of stock, the B shares usually cover the majority of stock outstanding and come with one vote per share. These shares are distinguished by stock symbols that add either 'b' or '.B' to the end. While these are standard parameters for 'B' shares, companies have wide discretion in allocating voting rights among different share classes.
- QuantumOnline.com: Preferred Ticker Symbols & Security Names
- MarketWatch: Berkshire Hathaway Inc. Cl B
- NASDAQ: Company List (NASDAQ, NYSE, & AMEX)
About the Author
Based near Philadelphia, Robert Rimm began writing professionally in 1989. He is also an educator, social entrepreneur and managing director of 88keys.com. Author of the book, "The Composer-Pianists," his articles have appeared in "International Piano" and "Fanfare" magazines, Dover Publications and many other sources. Rimm holds a Bachelor of Arts in political science from the University of Pennsylvania.