Jul 23

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Common Stock Definition

See Also:
Intrinsic Value – Stock Options
Company Valuation
Basis Definition
Balance Sheet
Paid in Capital (APIC)
Capital Gains
American Depositary Receipts (ADRs)

Common Stock Definition

The common stock definition is shares of common stock represent ownership of a public or private corporation. Shares of common stock usually give the shareholder voting rights. Therefore, the shareholder can vote on matters of corporate policy and the selection of members of the board of directors. The more shares an investor owns, then the more influence that investor has on the company.

Shares of common stock typically trade on financial exchanges. Thus, their values fluctuate according to the company’s performance and the market’s perceptions of the company.

But if a company goes out of business and liquidates its assets, then the last ones to get their invested capital back are the common stockholders. Bondholders and preferred stock holders are reimbursed before common stockholders.

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