Types of shares

Types of shares

The Treasury market is a debt market, and therefore, it does not involve shares. However, shares refer to ownership in a company, and they are traded in the stock market. Here are the different types of shares that exist in the stock market:

Common shares: Common shares are the most basic form of shares that companies issue. They represent ownership in a company and entitle the holder to vote at the company’s annual general meeting (AGM) and receive dividends.

Preferred shares: Preferred shares are a type of share that offers a fixed dividend payment, usually higher than the dividend payment on common shares. They generally do not have voting rights, but they have a higher priority when it comes to receiving dividends and payments in the event of bankruptcy or liquidation.

Blue-chip stocks: Blue-chip stocks refer to shares of large, established companies that have a long history of stable earnings and paying dividends. These stocks are often considered less risky than other types of shares and are usually more expensive.

Growth stocks: Growth stocks refer to shares of companies that are expected to grow faster than the market average. These companies reinvest their earnings into expanding their business, rather than paying dividends to shareholders.

Value stocks: Value stocks refer to shares of companies that are considered undervalued by the market. These companies may have a low price-to-earnings (P/E) ratio or a high dividend yield, indicating that they are potentially undervalued.

Preferences Shares

Preference Shares are those shares which gives their holders an entitlement to a fixed dividend but which do not usually carry voting rights. Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the company does not have to pay this dividend if it lacks the financial ability to do so.

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