Shares under the same class have identical rights

The difference in rights leads to difference in value of each stock class

The only time the business has to return the capital to stockholders is when the majority of them vote to liquidate part or total business

Types

Preferred stocks

Advantages :

1. They are promised limited dividends (not guaranteed)
2. During liquidation , after settling the liabilities , preferred stockholders are given their money back first before common stockholders

Disadvantages :

1. Mostly they don’t get any voting rights, unless dividends haven’t been paid for a period or more
2. They don’t get more dividend than what was promised

Common stocks

Advantages :

1. Voting rights
2. No cap on dividends. Once the preferred stockholders are paid their promised amounts , the remaining profit is shared among the common stockholders