CORPORATE STOCK - A Layman's view

CORPORATE STOCK: It can trigger in anybody's mind that stock held in a corporate is Corporate Stock. Yes, its right.

Lets check out the definition:-

An instrument that signifies an ownership position, or equity, in a corporation, and represents a claim on its proportionate share in the corporation's assets and profits. However, the claim to a company's assets and earnings of most stockholders is subordinated to the claim that the company's debtors have on its assets and earnings.

Two inferences can be drawn from the above definition-

- There must be an Ownership Position.

AND

- It must represent a claim in the Corporation's assets and profits.

The above inferences conclude that Debt i.e. Debentures and Bonds do not constitute Corporate Stock, Since there is a Claim but no ownership position.

So, Corporate Stock includes Common Stock i.e. equities and Preferred Stock i.e. Preference Shares but not the Debt Instruments.