Common stock vs. preferred stock: How they compare
Those looking to invest in publicly traded companies can easily do so by purchasing shares of stock on the open market. Broadly speaking, stock grants the investor a fractional ownership stake in the company. For many years, this model has been a source of funding that has helped companies grow. They use the money received from stock sales to invest in growth, pay off debt, or ramp up their research and development. While there are other sources of funding such as issuing bonds, stocks allow anyone who wants to invest an opportunity to earn a return. However, there’s more than just one type of stock . While most investors buy and sell what is known as common stock, there’s also something called preferred stock. And each of these types can be further divided into classes. This article will look at the differences between common and preferred stock. Each type has its own set of pros and cons and may be better for some investors, but not for o...