The Business has been going super well, so I wanted to expand. When looked to see how much money I had, and I saw that I only had $5,000. I would need way more money to start expanding my shop.
What I needed to do was go talk to some investors. To create stocks of my company, Which are small shares of ownership of Speedy.
Now that the investors are here. I am able to start expanding my company. They now own a piece of Speedy. We need need to choose a board of Directors to take lead of the company making sure everything is going alright.
After a period of successful business, I am able buy a company that sells skateboards. The Board thinks its a good idea for the company to have another product to sell. In order to buy the company the board has suggested to issue new stocks for more money. Instead of the common stock they issued a preffered stock. They give preferred stock to holders instead of money.
Now with preferred stocks the people get paid in dividends. The preferred stocks means that those stockholders want to get paid dividends. They also don't to vote for the board of directors. Only common stockholders get to vote for management.