There are several types of stocks available at the stock exchange. If you are familiar with these stocks then it is very convenient for you to do business, but for the other who do not know or for beginners, they are mostly confuse that cause them to turn their back away to the stock market.
A common stock is what you hear quite often. The common stock can be purchase by anyone regardless of their age, income and financial standing. common stock , basically you will be a part owner in the business you are investing in. As the company grows and earns money, the value of your stocks rises. If the company does poorly or goes bankrupt, the value of the stocks falls. Common stock holders do not participate in the operation of the company but they do have the power to elect to the board of directors. They also have the rights to attend to stock holders meeting.
There are also different classes of stock. The different classes of stock in one company are often called Class A and Class B. The Class A stock gives the stock owner more votes per share than the owners of Class B. A lot of investors avoid stocks that have more than one class and stocks that have more than one class are not called common stock.
Preferred stock is a mix of a stock and a bond. The owner of the preferred stock can lay claim to the assets of the company in the case of bankruptcy and proceeds to the profits from a company before a the common stock owners. The disadvantage of this is that the company typically has the right to buy the stock back from the stock owner and stop paying dividends.