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What is Common Stock?

A common stock is the one you’re most familiar with - having a share of ownership in a company.

Owning common stock in a company is a vote of confidence that an investor thinks the company will perform well, and grow. Owning common stock also entitles an investor to equity ownership in a corporation, voting rights, and shared participation in a company’s success through dividends and/or capital appreciation.

But a company’s fortunes could also go the other way, and a holder of common stock can endure losses. If a company goes bankrupt, holders of common stock are the last to be paid out, after bondholders and preferred stockholders.

As such, it is considered a riskier investment than owning debt or preferred shares.

What is a Preferred Stock?
What is the difference between Common Stock and Preferred Stock?

Keywords: stocks, risk, debt, preferred stock, common stock, convertible securities, outstanding shares,