Stock Market Vs Common Stock Essay

INTRODUCTION
For centuries financial systems have been indispensible parts of every country economic development. It plays an important role in the growth of industry and affects the whole economy in various ways. The basic role of financial system is to gather money from individuals who have more money (surplus) to those who are in need of the money (Deficit) with lower transaction costs. Both financial institutions and financial markets enhance this economic growth but the main emphasis of this paper will be on the stock market, which is one of the most important components of the financial market. This paper will also provide a profound study of how Stock Market investors can protect their investments and also analyze an article on investors

However, it is different in terms of dividends payments and claims against the firm’s assets in the event of bankruptcy. Preferred stocks as the name implies have some preferences over common stock especially when it comes to dividends. Preferred stock holder’s dividend payments have generally two features that are non-participating and cumulative. The word non-participating means that the preferred stock’ dividend is fixed and does not change regardless of the profitability of the firm. On the other hand the cumulative feature of the preferred stock holder signify that the firm has to pay the dividend to preferred stock before the common stock holders. The other difference that exists between preferred stock and common stock is that preferred stock holders are not entitled with the right to vote for the board of directors (Kidwell, Blackwell, Whidbee, & Sias, 2013).
Convertible securities: Convertible securities are known as securities that can be changed from one form into another. The most common convertible securities are convertible preferred stock and convertible bonds. Both of these two securities give the investor the chance to change them into equity or common