Common Stock Value | Definition | What is it?

Common Stock Value

Common Stock Value | Definition

Securities which represent an ownership interest in a corporation. If the company has also issued preferred stock, both common and preferred have ownership rights. The preferred stock normally is limited to a fixed dividend but has prior claim on dividends and, in the event of liquidation, assets. Claims of both common and preferred stockholders are junior to claims of bondholders and other creditors of the company.

Common stockholders assume the greater risk, but generally exercise the greater control and may gain the greater reward in the form of dividends and capital appreciation. Common shares let an investor vote on such matters as the election of directors.

The terms “common stock” and “capital stock” are often used interchangeably, when the company has no preferred stock. Outside the US the term "ordinary share" has a similar meaning.

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