The Two Main Issues of Stock

In addition to the unofficial kinds of stocks just discussed, the market has two issues of stock to accommodate different types of investors: common stock and preferred stock. As a very general rule, the benefits of common stock tend to be more geared for individual investors while those of preferred stock tend to be more geared to the needs of institutional investors such as pension funds, mutual funds, and banks.

Common Stock

Aptly named, common stock is the one most people think of when they hear the word stock. It's also the kind of stock most widely bought and sold, or in investor lingo—traded. It represents basic ownership of part of a company, as was described in the beginning of this lesson. The owner of one share of common stock gets one vote, or one proxy, on company matters. As stated earlier, two shares equals two votes and so on.