With drastic increase in the share prices, almost every individual is showing interest to buy shares. Moreover, stock markets act as engines for overall economic growth of any country. However, before entering the market, you should acquire knowledge about types of stocks available from any of the top stock exchanges in the world. Particularly, you should gain knowledge about stocks issued according to ownership rules, as we have mentioned here.
Common and Preferred Stocks
Difference between preferred and common stocks lies in the payment of promised dividend. Preferred stocks promise to pay a fixed amount in the form of dividends to investors yearly, while common stocks do not make such promises. Because of this, price of any preferred stock always remain constant or non-volatile than its counterpart. Secondly, preferred stock is more preferable when any company distributes its surplus amount of money to shareholders.
Experienced stock exchange investors associated with HQ Broker Reviews online have also mentioned about hybrid stocks issued by many companies. These stocks belong to the category of preferred stocks with an additional option i.e. one can convert such stocks into specific numbers of common stocks for a particular period. Experts also call these stocks as convertible preferred shares.
Stocks providing Derivative Options in Embedded Form
Some of the stocks come with derivate options in embedded form. Accordingly, the stocks may be of putable or callable. In case of callable stock, company can purchase the issued shares back at any particular time or for a certain price. Putable stock on the other side, gives stockholders with the option of selling stocks to the respective company at any specified price or time. However, these types of stocks are not available to investors commonly.
Therefore, based on the following information and guide, you will expect to make the appropriate investment and make money from the lucrative stock market.