What is Common stock?

WHAT IS COMMON STOCK?
Common stocks are the primary unit of ownership in a corporation with certain rights including voting and major issues concerning corporation. Shareholders as they are known have liability to the value of stocks. So generally common stocks are issued to the Founders, Board of directors, or employees through employee stock option program.
The holders of common stock can reap two main benefits from the issuing company: capital appreciation and dividends. Capital appreciation is rise in the value of assets based on the rise in market price. For example, say you have purchased a share for Rs 10/ per share, which pays dividend of Re 1/year and now trading at Rs 15/per share a year later. Your capital appreciation will be Rs5 or 50%.
Dividend as explained in earlier posts, are the payments made by the corporation to its shareholder members when it earns profit. Joint Stock Company allocates a fixed amount per share while Co-operatives allocate dividends according to the shareholders performance and activity. Dividend can be paid in cash or additional number of shares.

How stocks trade?

When stocks are bought and sold, it’s called trading. So when you hear that Infosys is trading at 1870, it means if you buy one share of Infosys you will have to pay Rs1870,if you buy two shares then 2x1870, if ten share then 10x1870 and so on!
A Re 1 move in stock price is called a point. If Infosys goes from 1870 to 1871, you’d say that it rose to 1 point. Many investors purchase shares in blocks of 100. A block of shares is called a round lot. Round lot provide a convenient way to tackle your stock investments, because every round lot you own, 1 point move up and down adds or subtracts Rs 100 from the value of your investment.
For example, if you own 100 stocks of Infosys that means 100xRs 1870=Rs 187000. Suppose it rises 1 point then value of your hundred shares of Infosys will get added by Rs100, thus your investment will be Rs 187000+Rs 100. Also if it goes 1 point down then your investment value will be Rs 187000-Rs 100, thus your investment will decrease by Rs 100!

What are Preferred Stocks?

Preferred stock, also called preferred shares or preference shares, is typically a higher ranking stock than voting shares, thus carry no voting rights but may carry superior priority over common stock in the payment of dividends and upon liquidation. Preferred stock may carry a dividend that is paid out prior to any dividends to common stock holders. The main benefit to owning preferred stock is that the investor has a great claim on the company’s assets than common stockholders.
TYPES OF PREFFERED STOCKS:
1. CUMULATIVE PREFFERED: Preferred stocks on which dividends accrue (accumulate or increase) in the event when the issuer does not make timely dividend payments. Most preferred stocks are cumulative stocks.
2. NON-CUMULATIVE PREFERRED: Preferred stocks on which unpaid dividends are not accrue.
3. PARTICIPATING PREFERRED: Preferred stocks which provides a specific dividend that is paid before any dividend are paid to common stock holders in the event of liquidation.
4. CONVERTIBLE PREFERRED: Preferred stocks that can be converted into a specific amount of common stock at the holder’s option.
5. ADJUSTABLE RATE PERFERRED: Preferred stocks whose dividend changes, usually quarterly, according to changes in the Treasury bill or on a similar benchmark.
On the mark of preference Preferred stock can also be divided into two parts:
1. FIRST PREFERENCE STOCK: Preferred stock which takes precedence over other preferred and common stock with regard to dividends and assets.
2. SECOND PREFERENCE STOCK: Preferred stocks which have rights subordinate to those of other preferred stock on dividend and assets. That means they are given preference after the First Preferred Stock.

What are stocks?

Stocks are considered as the plural form of share, thus a stock represents a share of ownership in a corporation.
HISTORY:
It goes right at the time when East India Company was established in1600 AD. The innovation of joint ownership made a great deal of Europe's economic growth possible following the Middle Ages. The technique of pooling capital to finance the building of ships, for example, made the Netherlands a maritime superpower. Before adoption of the joint-stock corporation, an expensive venture such as the building of a merchant ship could be undertaken only by governments or by very wealthy individuals or families.
STOCKHOLDERS:
A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company.
Thus anyone holding at least 1 share in any company will be known as the shareholder.