The company is Bank of America. Stocks Essay. Business & Marketing Essay

Corporate Stocks
Name
Institutional Affiliation
Corporate Stocks
Stock corporations operate as for-profit entities that sell shares to the public where the investors are entitled to a portion of the company’s total profit at a given time. The stocks that the investors buy are called corporate stocks. Corporate stocks earn profits in form of dividends, making them to qualify as investments for owners of the stocks. The primary reason that would make an investor to opt for corporate stocks is due to their ability to attract desirable profits. According to Amadeo (2018), stocks tend to attract higher returns compared to corporate bonds. Most investors are interested in investing their hard-earned cash in corporations that will attract bigger returns in a given time. Even though stocks promise higher returns in a given time, they also tend to carry higher risks since their market value tend to rise and fall steadily. Investors, however, tend to take the risk and invest in corporate socks due to their characteristic of lump sum returns in cases where the economy is growing. Investors that have conducted a good market research tend to reap from stocks when they invest in companies with a steady growth rate. Long-term investors can also take advantage of the market by buying stocks when they are trading low and selling when the price has increased. Additionally, stocks allow the investor to stay ahead of inflation. This is due to the fact that stocks grow with the economy and an investor can easily detect market changes from the manner in which the stocks are trading and make informed decisions.
Bank of America (BAC) Common Shares and Equity Securities
According to the information available from Nasdaq (2018), the Bank of America Corporation (BAC) trades at the New York Stock Exchange Stock (NYSE) Market on stocks as equity securities and common shares. According to Simon (2017), equity securities do not guarantee that the insurer will pay dividends to shareholders. Instead, it is expected that the corporation will act in the best interests of shareholders while paying dividends. Common shares and equity securities have their unique characteristics. The primary characteristic of common shares is that they represent ownership in a corporation. They also provide investors with a right to claim a company’s assets in the event of liquidation. Common shares also entitle shareholders a right to take part in governance matters of the company. According to Simon (2017), companies can issue common shares with different voting rights. Additionally, the company can also decide to buy back the shares in case the market acts in favor of the firm. Investors are also presented with an option of selling back shares to the company in the event that the market strikes in favor of the stockholders.
The other type of equity securities that BAC trades is the preference shares. In this type of stocks, the stockholders take priority over common shares in terms of sharing dividends and making claims on a company’s assets in event of liquidation. Stockholders of preference shares do not take part in voting or governance matters of an organization. They are, however, entitled to higher privileges in terms of divide...