Equities.us Equity Types 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. Home Types of Equities History of Stocks Equities in Today’s Markets Privacy Policy