1. Meaning of Common Stock:
   A Stock is a share in the ownership of 
  a company. Stock represents a claim on 
  the company’s assets and earnings. 
   Holding a company’s stock means 
  that we are one of the many owners of 
  a company and as such we have a 
  claim to everything the company owns. 
  2) Basic Features of Common Stock: 
     The following are the basic features of 
   Common stock:-
   1. As owners of the company, common 
   shareholders have the right to the 
   residual income and assets of the 
   company.
   2. Common stockholders are generally 
   the only security holders with the right 
   to elect the board of directors. 
    
  3. Preemptive rights (if granted) entitle the 
  common shareholder to maintain a 
  proportionate share of ownership in the 
  firm. 
  4. Common stockholder’s liability as an 
  owner of the corporation is limited to the 
  amount invested in the stock. 
  5. Common stock’s value is equal to the 
  present value of all future cash flows 
  expected to be received by the 
  stockholder. 
    3) TYPES OF STOCKS:
    There are two main types of stocks: 
    i)     Common Stock: Common Stock is the 
           investment made by the people in 
           shares (ownership) of a company. 
    ii)    Preferred Stock: With preferred shares, 
           investors are usually guaranteed a fixed 
           dividend forever. This is different than 
           common stock, which has variable 
           dividends that are never guaranteed. 
  4) Approaches to valuation of 
  Common Stock: 
   The valuation of common stock is 
  a complex and difficult because its 
  cash flows and maturity are not 
  fixed. 
   However, there are three well-
  known approaches to common 
  stock valuation: