![]() Holders of preferred stock are entitled to receive dividends at a fixed annual rate before any dividend is paid to the holders of common stock. Preferred stocks receive priority over common stock with respect to the payment of dividends. Preferred stockholders are usually entitled to priority over holders of common stock should a corporation liquidate. If a corporation does not issue preferred stock, all of its stock is common stock, entitling all holders to an equal pro rata division of profits or net earnings, should the corporation choose to distribute the earnings as dividends. In addition to common stock, some corporate bylaws or charters allow for the issuance of preferred stock. An owner of common stock is typically entitled to participate and vote at stockholders' meetings. Two main categories of stock exist: common and preferred. The market price reflects what purchasers are willing to pay based on their evaluation of the company's prospects. The value of a share of stock depends upon the issuing corporation's value, profitability, and future prospects. Stocks differ from other Securities such as notes and bonds, which are corporate obligations that do not represent an ownership interest in the corporation. An owner of stock generally has the right to participate in the management of the corporation, usually through regularly scheduled stockholders' (or shareholders') meetings. Nevertheless, a stockholder is a real owner of a corporation's property, which is held in the name of the corporation for the benefit of all its stockholders. Stock differs from consumer goods in that it is not used or consumed it does not have any intrinsic value but merely represents a right in something else. ![]() Each share represents a standard unit of ownership in a corporation. ![]() Shares of stock are reflected in written instruments known as stock certificates. A security issued by a corporation that represents an ownership right in the assets of the corporation and a right to a proportionate share of profits after payment of corporate liabilities and obligations. ![]()
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