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Glossary Common Stock

Common stock is a type of equity ownership in a corporation. Typically, the holders of common stock have a right to receive the income and assets of the company after all other claims have been satisfied. Common stock has lower priority than debt and preferred stock, but it may have greater upside, as debt typically has a fixed claim, whereas common stock is variable. Because common stock has more risks, it's given substantial control over the company in the form of voting rights to elect the board of directors which will manage the company.