What Is Common Stock?

Common stock for these of you who dont know is a security that represents ownership in a corporation.

Common stock is for the most part  reported in the stockholder’s equity section of a company’s balance sheet.

The investors in common stock in a way vote and elect the directors and vote on corporate policies. This approach of equity ownership for the most part yields higher rates of return long term.

But keep in mind that in the events of liquidation, the  common shareholders have rights to a company’s assets only after bondholders, preferred shareholders, and other debt-holders are paid in full.

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