By: Makabongwe Maseko
I bet you can t tell me the detailed meaning of stocks. Well if that s the case, I have compelled this good stock information list with brief descriptions for you.
Stock Classes
Although common stock usually entitles you to one vote for every share that you own, this is not always the case. Some companies have different classes of common stock that vary based on how many votes are attached to them. So, for example, one share of Class A stock in a certain company might give you 10 votes per share, while one share of Class B stock in the same company might only give you one vote per share. And sometimes it is the case that a certain class of common stock will have no voting rights attached to it at all.
So why would some companies choose to do this? Because it s an easy way for the primary owners of the company (e.g. the founders) to retain a great deal of control over the business. The company will typically issue the class of shares with the fewest number of votes attached to it to the public, while reserving the class with the largest number of votes for the owners. Of course, this isn t always the best arrangement for the common shareholder, so if voting rights are important to you, you should probably think carefully before buying stock that is split into different classes.
Large Cap, Mid Cap and Small Cap
Stocks can be classified according to the market capitalization of the company. The market capitalization of a company represents the total lilangeni value of the company s outstanding shares. This is equal to the current market price of its stock multiplied by the number of shares of stock that it has outstanding. That number gives you the market value of the company, which is one measure of the company s size. Roughly speaking, there are three basic categories of market capitalization: large cap, mid cap, and small cap. The definitions for each of these might vary somewhat depending on whom you re talking to, but usually they are as follows:
Large cap: market cap highest valued
Mid cap: market cap mid range value
Small cap: market cap lowest value
In general, the larger the cap size, the more established the company and the more stable the price of its stock. Small cap and mid cap companies usually have a higher potential for future growth than large cap companies, but their stock tends to fluctuate more in price.
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Stock Classes
Although common stock usually entitles you to one vote for every share that you own, this is not always the case. Some companies have different classes of common stock that vary based on how many votes are attached to them. So, for example, one share of Class A stock in a certain company might give you 10 votes per share, while one share of Class B stock in the same company might only give you one vote per share. And sometimes it is the case that a certain class of common stock will have no voting rights attached to it at all.
So why would some companies choose to do this? Because it s an easy way for the primary owners of the company (e.g. the founders) to retain a great deal of control over the business. The company will typically issue the class of shares with the fewest number of votes attached to it to the public, while reserving the class with the largest number of votes for the owners. Of course, this isn t always the best arrangement for the common shareholder, so if voting rights are important to you, you should probably think carefully before buying stock that is split into different classes.
Large Cap, Mid Cap and Small Cap
Stocks can be classified according to the market capitalization of the company. The market capitalization of a company represents the total lilangeni value of the company s outstanding shares. This is equal to the current market price of its stock multiplied by the number of shares of stock that it has outstanding. That number gives you the market value of the company, which is one measure of the company s size. Roughly speaking, there are three basic categories of market capitalization: large cap, mid cap, and small cap. The definitions for each of these might vary somewhat depending on whom you re talking to, but usually they are as follows:
Large cap: market cap highest valued
Mid cap: market cap mid range value
Small cap: market cap lowest value
In general, the larger the cap size, the more established the company and the more stable the price of its stock. Small cap and mid cap companies usually have a higher potential for future growth than large cap companies, but their stock tends to fluctuate more in price.
[Read full article]
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