‡Represents ownership. ‡Ownership implies control. ‡Stockholders elect directors. ‡Directors hire management. ‡Management s goal: Maximize stock price.

. with voting rights but dividend restrictions. TYPES OF COMMON STOCK ‡Classified Stock ‡Founders¶ shares.Preemptive Right oRight to purchase new shares in proportion to current holdings. ‡New shares might be called ³Class A´ shares. with voting restrictions but full dividend rights.

voting power) that "B" doesn't THE MARKET FOR COMMON STOCKS Closely held corporation A corporation that is owned by a individuals who are typically associated with the firm¶s management Stock is publicly traded but most is held by a few shareholders who have no plans to sell .common stock classified as "A" or "B" where "A" has certain advantages (for example.

rather than from issuing companies themselves. The market in which used stocks are traded after they have been issued by corporation .Publicly owned corporation A corporation that is owned by a relatively large number of individuals who are not actively involved in its management TYPES OF STOCK MARKET TRANSACTIONS Secondary Market A market where investors purchase securities or assets from other investors.

Companies. governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups. which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors.Primary Market A market that issues new securities on an exchange. .

IPO The first sale of stock by a private company to the public. . but can also be done by large privately owned companies looking to become publicly traded. younger companies seeking the capital to expand.Initial Public Offering . IPOs are often issued by smaller.