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Questions and Answers
What are the two main types of stock?
What are the two main types of stock?
The two main types of stock are common and preferred.
What benefits do shareholders have when owning stock?
What benefits do shareholders have when owning stock?
Shareholders have the right to vote in shareholder meetings, receive dividends, and sell their shares.
Why do companies issue stock?
Why do companies issue stock?
Companies issue stock to raise funds to operate their businesses.
How do stocks compare to other investments over the long run?
How do stocks compare to other investments over the long run?
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Study Notes
- A stock represents fractional ownership of equity in a corporation.
- There are two main types of stock: common and preferred.
- Shareholders have a claim to part of the company's assets and earnings.
- Stocks are bought and sold predominantly on stock exchanges.
- Stocks have historically outperformed most other investments over the long run.
- Companies issue stock to raise funds to operate their businesses.
- Owning stock gives you the right to vote in shareholder meetings, receive dividends, and sell your shares.
- There are important distinctions between stocks and bonds.
- All investments have a degree of risk.
- The type of stock held by a shareholder determines the rights and benefits of ownership.
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