Date: 18 Apr 2008 Comments: 0

There are different types of stocks available on the market, as such, they can be confusing to someone new to the stock market and may result in poor outcome. So before you buy stocks in the market it is best to know first their differences, and then decide which type is the most suitable to your needs.

The first type is the Common Stock. This is a stock that can be purchased by anyone. Ownership provides you with a part of the profit by the company in the form of dividends, also the right to vote on corporate policies and to elect the board of directors. Owners, however, do not participate in daily operations, and if the company is doing poorly or ends up bankrupt, common stocks may lose some or all of its value.

Moreover, there are some companies that offer two different classes of stocks under Common Stocks. They often call these as Class A, and Class B. Class A stock holders have literally more voting rights than Class B stock holders. Company stocks that have more than one class is not a common stock and most investors refrain from buying company stocks with more than one class.

And the last type, the Preferred Stock. Owners get higher dividend which is paid out before common stock holders. And depending on the terms negotiated between company and investor, owners either have superior voting rights or none at all, and they also have a claim of the assets of the company if it goes bankrupt.