If you hold a stock (share) of a company, then you’re considered as one of the many shareholders or owners of that particular corporation. This is because when you buy shares, you actually establish a claim to everything that the company owns. In turn, the company receives sale proceeds that help in its growth.

Types of stocks/shares issued by a company

Stocks can be broadly classified into preferred and common stocks. They are discussed below.

Common stocks

By purchasing common stocks you can enjoy the voting rights as well as get share of dividends. You can also elect the board members of a company if you have shares of that particular corporation. However, risks are associated with common stocks; you can make profit as well as lose money when the stocks are down.

Preferred stocks

Preferred stock owners have fewer rights as compared to common stock. However, a company, which issues preferred stocks, generally pays consistent dividends to the shareholders. Moreover, preferred stock has first claim on dividends in comparison to common stock Learn stock market investing that makes business sense with D’Intelligent Investor.Acquiring knowledge on the stock terms will help you to invest your money in shares. Go through the following lines to know about 5 stock terms or types of stocks usually issued by a company.

Restricted shares

They refer to company stocks that are used for compensation plans and offering incentives to the employees. The restricted shareholders need prior permission from SEC (Securities and Exchange Commission) to sell such stocks.

Authorized shares

These stocks indicate the total number of shares that were authorized by the company when it was established. The shareholders can vote to increase the number of authorized shares.

Float shares

These are the shares that you actually purchase from the market for trading. Float shares are traded in the open market.

Outstanding shares

They represent all types of shares that are issued by the company. So, outstanding shares comprise of restricted shares as well as float shares issued by a particular corporation.

Unissued shares

These shares are usually held by a company in its treasury. These shares are not issued either to the employees or to the public for sale.

As stated before, the companies issue stocks in order to raise capital that is used for financing various operations as well as for expansion plans. When a company makes profit, it shares the profit with the investors; however, when a company loses money, the shareholders also lose money. So, it is advisable that before you invest your money in a specific stock, learn about it as much as possible; it’ll help you to get profitable returns in future.

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