Chapter 6 Common Stocks Common stock represents equity, or an ownership position in a corporation. It is a residual claim, in the sense that creditors and preferred stockholders must be paid as scheduled before common stockholders can receive any payments In bankruptcy, common stockholders are in principle entitled to any value remaining after all other claimants have been satified The great advantage of the corporate form of organization is the limited liability of its owners Common stocks are generally"full paid and nonassessable", meaning that common stockholders may lose their initial investment, but not moreChapter 6 Common Stocks Common stock represents equity, or an ownership position in a corporation. It is a residual claim, in the sense that creditors and preferred stockholders must be paid as scheduled before common stockholders can receive any payments. In bankruptcy, common stockholders are in principle entitled to any value remaining after all other claimants have been satified. The great advantage of the corporate form of organization is the limited liability of its owners. Common stocks are generally “full paid and nonassessable” , meaning that common stockholders may lose their initial investment, but not more