Common vs. Share

Attribute	Common	Share
Ownership	Owned by multiple individuals or entities	Owned by multiple individuals or entities
Profit Distribution	Profits are distributed based on ownership percentage	Profits are distributed based on number of shares held
Voting Rights	Each owner has equal voting rights	Voting rights are based on number of shares held
Transferability	Ownership can be transferred freely	Shares can be bought and sold on the stock market

Definition

Common and share are two terms that are often used interchangeably in the world of finance and investing. However, they have distinct attributes that set them apart. Common refers to a type of stock that represents ownership in a company and typically comes with voting rights. On the other hand, share is a broader term that can refer to any unit of ownership in a company, including common shares, preferred shares, or other types of securities.

Ownership Rights

One key difference between common and share is the ownership rights that come with each. Common shareholders have the right to vote on company matters, such as electing the board of directors or approving major decisions. They also have the right to receive dividends, although these are not guaranteed. On the other hand, shareholders may not have voting rights and may have different rights to dividends depending on the type of share they hold.

Dividends

Dividends are payments made by a company to its shareholders out of its profits. Common shareholders are typically entitled to receive dividends, although the amount and frequency of these payments can vary. Shareholders, on the other hand, may not be entitled to dividends or may have different rights to dividends depending on the type of share they hold. For example, preferred shareholders may have priority over common shareholders when it comes to receiving dividends.

Risk and Return

Common shares are generally considered riskier than other types of shares, such as preferred shares, because they are the last to be paid in the event of a company liquidation. However, they also have the potential for higher returns, as they are tied to the company's performance. Shareholders, on the other hand, may have different levels of risk and return depending on the type of share they hold. For example, preferred shareholders may have a fixed dividend rate and may be paid before common shareholders in the event of a company liquidation.

Liquidity

Common shares are typically more liquid than other types of shares, such as preferred shares, because they are traded more frequently on stock exchanges. This means that it is easier for common shareholders to buy and sell their shares at any time. Shareholders, on the other hand, may have different levels of liquidity depending on the type of share they hold. For example, preferred shares may be less liquid because they are not traded as frequently as common shares.

Valuation

Common shares are valued based on the company's earnings and growth potential. The price of a common share can fluctuate based on market conditions and investor sentiment. Shareholders, on the other hand, may have different valuation metrics depending on the type of share they hold. For example, preferred shares may be valued based on their fixed dividend rate and other factors specific to the type of share.

Conclusion

In conclusion, common and share are two terms that are often used interchangeably but have distinct attributes that set them apart. Common shares come with ownership rights, voting rights, and the potential for higher returns but also carry more risk. Shareholders may have different rights, risks, and returns depending on the type of share they hold. Understanding the differences between common and share can help investors make informed decisions when it comes to investing in stocks.