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Types Of Stocks

Stocks can be broken up into 3 categories; common stock, preferred stock, and class stock.  Common stock makes up the majority of stocks.  As a common stock holder, you have a right to claim dividends and get to have one vote per share when electing board of directors. 

Preferred stock do not come with the same voting rights but comes with a guaranteed fixed dividend.  This is different from common stock because common stock’s dividend is never guaranteed.  So in reality, preferred stock is more like a bond, which pays out a return.

Companies sometimes issue different classes of stock.  Usually this is done to differentiate voting rights to different classes.  One class might be entitled to 5 votes per each share while the other class is the normal 1 vote to each share.  Class A and Class B are the typical designations.

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