Ordinary and Preference Stocks

Abstract

Before we commence our analysis of the various investment media it will be necessary to clarify the way it is intended to use the basic terms of Stocks and Shares. The following definitions will indicate the range of interpretations possible: ‘Stocks: In the U.K. the term is usually used in reference to a fixed-interest security issued and quoted in units of £100. However, the term is sometimes used synonymously with ordinary shares (or with ordinary shares and fixed-interest securities collectively), as in the term growth stocks. In the U.S.A., however, where ordinary shares are called common stock, the term is used quite generally in reference to ordinary shares.’ — A Dictionary of Economics and Commerce, edited by S. E. Stiegeler and Glyn Thomas (Pan Books, 1976). ‘Stocks and Shares: Terms which tend to be used interchangeably, the distinction becoming blurred. Stocks, however, denote money lent to a government, local council or company and involving a fixed rate of interest; shares denote part-ownership of a company’s capital, issued in a variety of terms and yielding variable returns.’ — Alan Gilpin, A Dictionary of Economic Terms, 4th ed. (Butterworth, 1977).