As a stock marekt beginner you will hear the two terms very commonly and these are Class A and Class B shares.
Well what are they, how much risk they carry and what happens to the stock in terms voting rights.It is these voting rights that determine who has the voice to be heard during the annual general meeting of the board.
Common stock is what we will discuss first and this stock of share is what is issued by the company in general and these shareholders who have the common stock then elect a board of directors which will make sure that the company has a good corporate policy. In terms of risk carrying the common stock carries maximum risk because once everyone is paid off only then can you as a common shareholder will be paid in the event of the liquidation of the company.
Agreed that these shares carry higher risk but the fact is that these shares also have the most appreciation and that is why general shareholder will only buy common stock.
As compared to common stock the preferred stock is the one which will be paid off before the common stock shareholders. Preferred shareholders do not have any voting rights but they do get some amount of fixed dividend. The preferred stock is less risky than the common stock.
For giving more voting power to certain type of shares the companies have Class A and Class B shares. Class A shares will have five or may be ten votes per share whereas Class B shares will only have one vote per share. This way there is more voting power for certain section of investors.
Try not be a casual investor and make sure to read the company prospectus as well as various bylaws
Well what are they, how much risk they carry and what happens to the stock in terms voting rights.It is these voting rights that determine who has the voice to be heard during the annual general meeting of the board.
Common stock is what we will discuss first and this stock of share is what is issued by the company in general and these shareholders who have the common stock then elect a board of directors which will make sure that the company has a good corporate policy. In terms of risk carrying the common stock carries maximum risk because once everyone is paid off only then can you as a common shareholder will be paid in the event of the liquidation of the company.
Agreed that these shares carry higher risk but the fact is that these shares also have the most appreciation and that is why general shareholder will only buy common stock.
As compared to common stock the preferred stock is the one which will be paid off before the common stock shareholders. Preferred shareholders do not have any voting rights but they do get some amount of fixed dividend. The preferred stock is less risky than the common stock.
For giving more voting power to certain type of shares the companies have Class A and Class B shares. Class A shares will have five or may be ten votes per share whereas Class B shares will only have one vote per share. This way there is more voting power for certain section of investors.
Try not be a casual investor and make sure to read the company prospectus as well as various bylaws
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Author has a beginners guide to stock market where he explains about the understanding the djia
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