Discuss the similarities and differences between common stock and preferred stock. Which type of stock would you prefer to own? Why? Stocks are the way companies raise money. Instead of going into debt to finance new ventures, companies sell part of their wealth (common stock) in the form of shares of stock each share represents a fraction of the worth of the company. Some stocks pay dividends regularly, some stocks only increase and decrease in value as the value of the company goes up and down. Stocks common are preferred, they are more than investments they are also ownership in a company. A stock holder has a say in how a company is run including the hiring and firing of the people who run the company.
When and why do corporations issue common and preferred stock? Corporations issue shares of stock equity to owners, alongside bonds and commercial paper to creditors, to finance their operations. Preferred stock is a shareholder equity class that actually combines characteristics of both common stock and bonds. Companies issue prefers stock for any number of reasons, but most typically, because their investors demand it.
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