Common Stock

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Common Stock

Evidence of participation in the ownership of a corporation that takes the form of printed certificates.

Each share of common stock constitutes a contract between the shareholder and the corporation. The owner of a share of common stock is ordinarily entitled to participate in and to vote at stockholders' meetings. He or she participates in the profits through the receipt of dividends after the payment of dividends on preferred stock. Shares of common stock are the Personal Property of their holder.

common stock

n. stock in a corporation in which dividends (payouts) are calculated upon a percentage of net profits, with distribution determined by the Board of Directors. Usually holders of common stock have voting rights. These are distinguished from preferred stock in which the profits are a predetermined percentage and are paid before the common shareholders who gamble on higher profits, and collectively have voting control of the corporation. (See: corporation, stock, share, preferred stock)

See: kinship, relation
References in periodicals archive ?
Interestingly, though, preferred stock is typically a lot less volatile than common stock, whose price can plummet due to anything from bad news from the company to a downgrade from a Wall Street analyst.
Unlike plain-vanilla preferred stock, convertible preferred sells at a price close to the market value of the common stock and tends to move in tandem with the common.
Generally, a P/E ratio refers to the price of a common stock divided by the net income per share generated by a business over a 12-month period.
A private drug retailer, for example, may review the data in the table and conclude that its common stock should be valued at 16 times net income, the indicated average.
For example, after recapitalizing his stock in the family corporation, a parent might choose to retain the common stock and give the preferred stock to his children.