what is common stock?

Common stock is a type of stock that represents ownership in a corporation. When an individual or institution buys common stock, they become a shareholder of the corporation and are entitled to a portion of the corporation's assets and profits. Common stockholders also have voting rights on matters such as the election of the board of directors and any proposed changes to the company's bylaws.

Common stock is called "common" because it is the most basic type of stock and is the most widely held type of stock by individual investors. The value of common stock can fluctuate based on the performance of the company, as well as market conditions and overall economic conditions.

Common stockholders may receive dividends, which are payments made to shareholders from the company's profits. However, common stockholders are last in line to receive dividends after all other types of stock holders and debt holders are paid. Common stockholders also have the potential to earn a return on their investment through capital appreciation, which occurs when the stock's price increases.

It's important to note that common stockholders also have a residual claim on the company's assets, meaning that if the company goes bankrupt and liquidates, common stockholders will only receive any remaining assets after all debts and other obligations have been paid.

In summary, Common stock is a type of stock that represents ownership in a corporation, gives shareholders voting rights and the potential to earn a return through dividends and capital appreciation, and also have a residual claim on the company's assets.