What Are the Types of Shares in the Stock Market?
- Common stock entitles you to partial ownership of a company. As InvestorGuide.com points out, owning common stock typically provides you with voting rights. When a company wants to make major decisions, it will have to earn approval from its shareholders.
- Preferred stock ownership offers fewer risks than common stock ownership, though there are disadvantages. Holders of preferred stock are paid before any other shareholders, according to AllBusiness.com. On the other hand, preferred shares entitle the owner to no voting rights.
- Stocks can be purchased in a number of ways. You can buy or sell stock, exchanging the shares for the established market value. Among other options according to NASDAQ, you can "short" a stock. This means the seller asserts the price of a stock will go down. If the price of the stock in question goes up, he or she must pay for the stock at the then-current, higher price.