Introduction
For doing anything, any business, or any activity, its information is necessary and stocks information is extremely necessary for entering into the currency and stocks trade. There are many things that a new trader needs to know for managing different types of stocks. There are different ways for acquiring partnership or ownership in the company and stocks is one of those ways. Through the introduction and stocks circulation in the market, company or public sector organization gathers funding and stocks buyer becomes stake holders in the company.
Detail
Trading of stocks deals with mainly two types of stocks; stocks that are common and stocks that are preferred. The common are the stocks that are held by the majority of the public. When anything in the news is announced saying stocks are going up and stocks are going down, or the dividend is declared and stocks holder is requested to be present at the annual general meeting; this is always referred to as common stock. The common stockholders have the voting right to vote for a company’s board and they can also take part in the company’s decision making process. The board and stocks holder, both at times work together to make any decision for the betterment of the company. And stocks that are common; their holders are eligible to receive dividends, whenever it is declared.
Features
After common stock, the second widely known and stocks that are widely traded but at a lower level than common stock, are preferred stock. By name they sound to have something extra but they have lesser rights as compared to common stock holders. They enjoy preferred rights when it comes to dividend. When a dividend is declared and stocks holder are notified, the preferred stock holders are the first to receive dividends; first then common stock holders. Preferred stockholders do not take part in decision making nor do they enjoy the voting rights. The next thing that is related to stocks and trader needs to know is the liquidity part. It refers to how quickly that stock or financial instrument can be converted to cash. The quicker the conversion into cash, higher will be the liquidity of the instrument. Common stocks are more liquid and can be traded easily as compared to the preferred stock.
Comments
Another thing that stock traders need to know is the dividend. Dividends are the profits or company’s retained earnings that are declared and distributed among the stockholders at the end of the fiscal year. Usually it is not necessary to hold the stock for the whole year but in some cases it is restricted for the stockholder to hold it throughout the year to receive the dividend. Many companies issue stocks for funding their ongoing and upcoming projects. The company with good credit ratings and market reputation; their stocks and shares are traded at a higher price as compared to smaller and less reliable companies. There are a number of factors that affects the rise and fall of a company’s stock. A person should learn about these factors and the company before stepping into the stock trade.
