There are different types of equity, and public stocks are not the only type out there.
Typically, equity types include the following:
Public or common stock - as discussed above, common stock represents
equity shares that anyone can purchase in a company. With enough shares, a
buyer can begin to shape the direction of the company. Such equity holders
are considered the lowest priority of ownership level among stocks in a
company. If the company goes bankrupt, these stockholders have a right to
company assets only after bond owners, preferred equity holders and
creditors. Generally, such shareholders end up with very little.
Preferred stock - This type of equity transacts generally similar to common
stock, however, it gets a better treatment by a company than the common
shareholder. First, preferred shareholders get dividends before the common
shareholders. If there's not enough funds, the common shareholder lose out.
Additionally, preferred stock gets a higher priority at assets in the case of a
bankruptcy. This type of equity is frequently provided to the company
executives and employees. However, it also tends to come with restrictions on
when it can be sold off, how much, and by whom. Finally, preferred equity
typically does not come with voting rights that common stock retains.
Types of Equities
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Convertible preferred stock - this type of equity is a hybrid. It starts off a
preferred stock with an option at some point to change or "convert" the
shares to common, ordinary stock.
Private equity - while not really a stock per se, private equity can be just as
important for a business seeking funding and capital liquidity. The company
privately gives a share of its ownership to a private investor who, just like
common stock holders, turns over a certain amount of cash. However, private
equity is not regulated by public markets. Instead, it is enforced by private
agreement and litigation if necessary.
Types of Equities
History of Stocks
Equities in Today’s Markets