If you are beginners in stock market and do not have any knowledge on finance market but interested to invest in stocks, your first step is to understand stocks and finance market. Stock is the unit of ownership in a company. If you acquire a share of company’s stock, you become a part owner of the company.You have the voting right on selecting the members of the board of directors and other important matters of the company. Being a part owner of the company you are also entitled to get dividend if company declares it.
Being a part owner of the company only your stocks become worthless in case of company’s insolvency. None of the creditors have right to take over your personal assets. But for private-held companies it is not applicable.
Types of stocks:
1. Common stock
2. Preferred stock
Common stock: Most of the common stock is held by individuals. Whoever acquires major part of the stocks can play big roll on the decision of the board of directors. Every individual is entitled to have voting right on the company’s affair along with share in dividends. The value of common stock may increase or decrease everyday. It depends on the volume of buying or selling of the shares.
Preferred stock: The investors who need consistent profit via dividends should buy preferred stock. It has first right to get dividend if company declares it. But preferred stock has fewer rights on the company’s affair than common stock. In case of insolvency preferred stock holders will have first right to get their invested amount. So your money is safe if you invested in preferred stock.
Liquidity of stocks: You can purchase or sell the common stock everyday. It is highly liquid. Sales proceed may take 2 or 3 days to be credited in your account.
Being a part owner of the company only your stocks become worthless in case of company’s insolvency. None of the creditors have right to take over your personal assets. But for private-held companies it is not applicable.
Types of stocks:
1. Common stock
2. Preferred stock
Common stock: Most of the common stock is held by individuals. Whoever acquires major part of the stocks can play big roll on the decision of the board of directors. Every individual is entitled to have voting right on the company’s affair along with share in dividends. The value of common stock may increase or decrease everyday. It depends on the volume of buying or selling of the shares.
Preferred stock: The investors who need consistent profit via dividends should buy preferred stock. It has first right to get dividend if company declares it. But preferred stock has fewer rights on the company’s affair than common stock. In case of insolvency preferred stock holders will have first right to get their invested amount. So your money is safe if you invested in preferred stock.
Liquidity of stocks: You can purchase or sell the common stock everyday. It is highly liquid. Sales proceed may take 2 or 3 days to be credited in your account.
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