What is common stock, and what are its different types?

Common stock is a type of investment that shows ownership in a company. People who own common stock vote for the board of directors and decide how the company will run. Most of the time, this type of equity ownership gives higher rates of return over time.

In the case of liquidation, however, common shareholders can only claim a company’s assets after bondholders, preferred shareholders, and other creditors have been paid in full.