The difference between common and preferred stock
Whereas both common and preferred stock holders have an ownership in the company, there are two manifest difference involving dividends in normal operation and the extreme situation of insolvency. In preferred stock, the dividends are higher and prioritized over those of the common stock holders (Agarwal, 2015). During insolvency, after payment of all liabilities, the preferred stock holders will be paid first with the common bond holders being paid last, if there is a remnant. Finally, common stock carries voting rights on how and by whom the company is to be governed while preferred stock generally does not have voting rights (Agarwal, 2015).
Par Value stock, Stated Value stock, and no par
Par Value refers to the redeemable value of an issued share as issued; this is the amount the investor gets upon redemption of a share. The total value of all issued shares is referred to as the stated value stock. However when no pecuniary value is indicated for the issued share, it is called no par stock (Shapiro, 2014).
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Paid in Capital
This is the total amount raised by a company through the sale of shares only including the payment of the par value stock but excluding any monies realized through other sources (Shapiro, 2014).
Types of dividends
The two types of dividends are cash and stock dividends. Cash dividend is the amount paid out to an investor in accompany as share of the profits realized by the company and is often done on regular a basis. Stock dividends also called scrip divided and refers to dividends paid to an investor in the form of additional shares in the same company.
References
Agarwal, K. (2015). Company shares: Meaning, nature and types. Retrieved from <http://www.yourarticlelibrary.com/accounting/company-accounts/company-shares-meaning-nature-and-types/46808/>
Shapiro, W. H. (2014). Validity of issuance of no par stock for property and services. St. John's Law Review , 5(1), 95-102.
