Stocks Trading Explained
There are two main types of shares: common and preferred.
Common shares entitle you to a part in company’s profits – the dividends and often carry one vote per share. However, the payout of dividends depends on the capital growth of the company. Some companies choose not to pay dividends to common shareholders at all.
Preferred shares, on the other hand, receive a fixed dividend and in the event of bankruptcy are paid off before common shares.
The prices of shares are set through an auction where buyers and sellers place the bids and offers to buy and sell.