As a stock marekt beginner you will hear the two terms very commonly and these are Class A and Class B shares.
The class of shares in fact tells you how much and what kind of voting right do you have and that in turn will determine the way you will be able have your opinion heard at the annual general meeting of the board.
Common stock is what we will discuss first and this stock of share is what is issued by the company in general and these shareholders who have the common stock then elect a board of directors which will make sure that the company has a good corporate policy. In terms of risk carrying the common stock carries maximum risk because once everyone is paid off only then can you as a common shareholder will be paid in the event of the liquidation of the company.
But as a general stock market investor these comon shares are the ones whihc will generally appreciate more than anything else and that is where the higher risk pays off.
As compared to common stock the preferred stock is the one which will be paid off before the common stock shareholders. Preferred shareholders do not have any voting rights but they do get some amount of fixed dividend. The preferred stock is less risky than the common stock.
For giving more voting power to certain type of shares the companies have Class A and Class B shares. Class A shares will have five or may be ten votes per share whereas Class B shares will only have one vote per share. This way there is more voting power for certain section of investors.
Make sure to read the companies charter,bylaws and prospectus before investing as a careful investor is likely to make more money than a casual investor. - 15224
The class of shares in fact tells you how much and what kind of voting right do you have and that in turn will determine the way you will be able have your opinion heard at the annual general meeting of the board.
Common stock is what we will discuss first and this stock of share is what is issued by the company in general and these shareholders who have the common stock then elect a board of directors which will make sure that the company has a good corporate policy. In terms of risk carrying the common stock carries maximum risk because once everyone is paid off only then can you as a common shareholder will be paid in the event of the liquidation of the company.
But as a general stock market investor these comon shares are the ones whihc will generally appreciate more than anything else and that is where the higher risk pays off.
As compared to common stock the preferred stock is the one which will be paid off before the common stock shareholders. Preferred shareholders do not have any voting rights but they do get some amount of fixed dividend. The preferred stock is less risky than the common stock.
For giving more voting power to certain type of shares the companies have Class A and Class B shares. Class A shares will have five or may be ten votes per share whereas Class B shares will only have one vote per share. This way there is more voting power for certain section of investors.
Make sure to read the companies charter,bylaws and prospectus before investing as a careful investor is likely to make more money than a casual investor. - 15224
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Author invests regularly in stock markets and has a beginners guide to stock market where he explains about the understanding the djia
