Stock

In America shares in a company are referred to as "stock." Companies raise capital by issuing and distributing stock with a corporation's market capitalization being equal to the total number of shares issued.

There are two major types of stocks, common and preferred. Owners of common stock receive applicable dividends and have the privilege of voting at shareholder meetings. Preferred stock owners receive their annual dividend payment first (before the common stock holders) and also have preferential treatment in the event of a corporate liquidation, but normally they do not have voting rights.

A board of directors working in concert with company managers have the responsibility of running the company in the interest of the stockholders. Shareholders have voting rights equal to the percentage of shares owned in the company and thus elect the board of directors. Normally, however, this is a function only exercised by the largest stock holders.

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