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
- Annuities: Good or Bad?
- Seaspan Corporation Earnings: Smooth Sailing As Revenue Increases 12%
- Colt Teeters on the Edge of Bankruptcy: How This Gun Maker Missed the "Obama Boom"
- Could This Deal Bring Molycorp Back From the Dead?
- This New Study Is Really Good News for Netflix
- Disney's ESPN Sues Over Verizon FiOS "Custom TV" Bundle-Breaking Deal