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Equity

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Definition: A stock is a general term used to describe the ownership certificates of any company. A share, on the other hand, refers to the stock certificate of a particular company. Holding a particular companys share makes you a shareholder.

Description: Stocks are of two types—common and preferred. The difference is while the holder of the former has voting rights that can be exercised in corporate decisions, the later doesnt. However, preferred shareholders are legally entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.

There is also something called convertible preferred stock. This is basically a preferred stock with an option of converting into a fixed number of common shares, usually any time after a predetermined date.


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