Owning Stock
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Introduction:
This discussion requires you to explore the differences between the types of stock from a personal perspective. If you do not already own stock, it will give you a chance to think about it.
Tasks:
Which stock would you prefer to own and why? Keep in mind the pros and cons of each stock and how they are valued.
Provide an explanation for your choice.
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Solution Summary
The solution discusses the different kinds of stocks and the pros and cons of preferring preferred stock over the other kinds of stocks. References also included.
Solution Preview
Which stock would you prefer to own and why? Keep in mind the pros and cons of each stock and how they are valued. Provide an explanation for your choice.
Types of Stocks: (As per Investopedia.com)
Common Stock
Common stock is, well, common. When people talk about stocks they are usually referring to this type. In fact, the majority of stock is issued in this form. Common shares represent ownership in a company and a claim (dividends) on a portion of profits. Investors get one vote per share to elect the board members, who oversee the major decisions made by management.
Over the long term, common stock, by means of capital growth, yields higher returns than almost every other investment. This higher return comes at a cost since common stocks entail the most risk. If a company goes bankrupt and liquidates, the common shareholders will not receive money until the creditors, bondholders and preferred shareholders are paid.
Preferred Stock
Preferred stock represents some degree of ownership in a company but ...
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