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Business Venture

In: Business and Management

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Business Venture

ACC/281
June 25,2012

Business Venture
Different Types of Corporate Stocks
There are two different types of stocks in which a corporation can sell. It does not matter if it is a penny stock, growth stock, or blue chip stock corporation, they can sell common stock or preferred stock. Each type stock has its own advantages and disadvantages. It would be up to the investor to decide which type of corporation stock would work best for him or her.
Common Stock
Common stock is just as its name states, common. This type of stock is the most basic type of stock a corporation sells. One can by this stock and own a piece of the company. This is by far the most type of stock sold, but it does come with some risk. The risk with common stock is, one is taking a gamble. If the company is successful one can make a good profit, but if the company fails common stock holders are the last to be paid his or her dividends. This type of stock also allows the investor one vote per share when electing board members. By means of capital growth, common stock yields the highest return over the long term than any other investment. When all common stock is issued, companies will start to issue preferred stock.
Preferred Stock
Preferred stock holders also have ownership in the company, but may not have the same voting rights. One advantage of preferred stock is the investor gets his or her dividends before common stock holders are paid. This is also the case if the company was to go bankrupt. The disadvantage of preferred stock, is if the company is doing well preferred stock holders do not make as much from the profits, because they are paid a fixed dividend. Preferred stock can also be broken in to classifications. These classifications are usually, A, B and so on. The company makes these classifications any way they want. They can be classified by the number of...

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