Common Stock
An ownership share in a company, with voting rights and last claim on assets.
What is Common Stock?
Equity ownership. Common shareholders vote on corporate matters, may receive dividends when declared, and participate in growth without limit - but they stand last in line behind creditors and preferred holders in a liquidation.
Common Stock: a worked example
One share of a company with 1 billion shares outstanding is a one-billionth claim on residual earnings.
More terms in Securities & Instruments
Preferred Stock
Equity with a fixed dividend and priority over common, usually without votes.
Bond
A loan to an issuer that pays interest and returns principal at maturity.
Coupon Rate
The bond's stated annual interest as a percentage of par.
Yield to Maturity (YTM)
The total annualized return if you buy today and hold to maturity.
Par Value (Face Value)
The principal repaid at maturity, conventionally $1,000 per bond.
Duration
A bond's price sensitivity to a 1% change in interest rates.
Credit Rating
An agency's assessment of an issuer's likelihood of default.
High-Yield (Junk) Bond
A below-investment-grade bond paying more to compensate for default risk.