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Common Stock

POSTED ON JUNE 03, 2022    

What it is

Common stock is a type of equity security. Everyone who owns common stocks of a company is a part-owner of that company, making them eligible to share in that company’s performance through dividends and/or capital appreciation.


Common stock is traded in a stock market. In the Philippines, it is the Philippine Stock Exchange or PSE.


What it means for you

Potential investors can choose from common stock and preferred stock of a company. The two types differ according to the rights that they give their owners.


For example, if a company is liquidated, preferred stock owners will get their share before common stockholders will. There may also be differences in terms of the right to vote for the company’s board of directors, and of the dividends received.


Common stock and preferred stock are traded separately from each other, and so their prices probably won’t be the same.


While you can buy both types through a stock brokerage, there are also other ways to put your money in stocks.

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