We hear the word stock quite often by many of us, no matter the one from who knows much better about the stock and stock exchange or just a newcomer or too young to talk about the stock and stock exchange. However, there are many things to explore and discuss the stock in the future. We will explore one after the other about the stock in our blogs, on the regular basis.
Let us see how many kinds of stocks are there or considered. When we talk about the basics of the stock, it is nothing but a single piece of the wealth of the company, which is going to provide the ownership for that single piece of the wealth of the enterprise. The company invites the new and small owners into the company so that the capital of the business can be raised to a proper level that it can grow and increment the profits day by day.
Okay, when we are talking about the types of stocks, let me tell you, more broadly, the stock can be classified in three ways.
- Common Stock
The stock that we trade on the regular basis is the stock we are talking about here. This is called the stock. The single piece of the wealth or property of the company that can be owned by an outside individual through the legal form, called share is the common stock. And this stock is the stock that we see and trade in the stock exchange. It is simply the general stock that we all think and trade usually. The common stock is the stock that can execute quickly through the stock exchange. There are risks associated with the common stock because if there are any risks associated with the company, like bankruptcy, or any adversities happened to the company, the shareholder gets nothing and this is the quite often risk associated with the common stock.
- Preferred Stock
The preferred stock is different from the common stock that we always talk about. It is not the general or common stock that is offered to the general public. You get the preferred stock in different ways. For example, you may have to pay more to buy the preferred stock. Unlike the general eligibility, one gets the ability, like being a part of the company, etc. The significant advantage of the preferred stock is that the shareholder gets paid, even the company goes losses or also experiences the bankruptcy or any such adversities.
- Unlisted Stock
When we talk about the common stock, it is traded on the stock exchanges, but when it comes to the unlisted stock, it is different in the ways that the trading is not done in the stock exchange. The exchange of the stock is done in the company itself, or at some specific locations.
The last two types of stocks, like preferred stock and unlisted stock, are not usually dealt with by the ordinary shareholder.