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Different kinds of shares or stocks

 Kinds of Shares

Most of the investors didn’t concern in which type of share they were investing and because of that sometime they ends in wrong place. It is best for every investor to know about all type of shares because different shares are subject to different risks. Every investor can tolerate different level of risk and by knowing that they can chose according to their risk potential.

The Share-capital of a company limited by shares, formed after the commencement of the companies Act, 1956 or issued thereafter consists of two kinds of shares:
  1. Preference shares:- Such shares enjoy preferential rights like payment of dividend at a fixed rate during the life of the company, and  the return of capital on winding up of the company. Normally preference share holders do not enjoy voting rights like equity (common share) holders but they have voting right in distinguish circumstances. 
  2. Equity Shares (also known as ordinary shares):- It’s a very common form of shares and first choice for most of the investors. They have full right over surplus profit on winding up of the company after preference shares and creditors. In the matter of dividend, directors have sole right to decide whether equity share holders receive dividend or not? It’s directors choice. 
So these are various types of shares and by knowing that you can chose, which share is best for your investment. But one thing always keep in mind that is “every share comes with some risk” so chose wisely.
“GOOD LUCK”

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