Stocks Definition

A stock is a type of security that represents ownership in a corporation and entitles the holder to certain privileges, such as voting rights and receipt of dividends. The two main types of stock are common stock and preferred stock. Common stock is the more traditional form of investment and entitles the shareholder to vote on corporate matters and receive dividends. However, should the company dissolve, common shareholders are last in line to receive any assets. Preferred stock does not come with voting rights but generally pays higher dividends than common stock and has priority over common stock in the event of liquidation.