Stock Types Common & Preferred

 

Basics

When a company decides to raise capital (money), they often “go public” through what is known as Initia an Initial Public Offering (IPO) of stock.  l Public Offering (IPO). During this time they create stocks, or shares in a company.

When you own a stock, you are part owner of a corporation.  There are actually two different types of stocks "common" and "preferred".  Stocks can be listed on one of the major stock exchanges or on one of the electronic exchanges (see Stock Markets & Securities Exchanges  ) Some investors will trade stocks on a daily basis, and some will hold on to a well managed company’s stock for years.  Once you purchase shares of a company, if the stock goes up and you sell your shares, you will make money.  On the other hand, if the stock prices decline, you will lose money on your investment(s)