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Private Wealth Management: The Complete Reference for the Personal Financial Planner, Ninth Edition, 9th Edition by Jerry Rosenbloom, G. Victor Hallman

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5

Common Stocks

Common stock may be defined as the residual ownership of a corporation that is entitled to all assets and earnings after other claims have been paid and that generally has voting control. In short, common stock is the fundamental ownership equity.

In modern asset allocation planning (see Chapter 9), it is recognized that common stocks as a group historically have provided superior total returns over reasonably long periods as compared with certain other investment media (e.g., bonds and Treasury bills). However, as noted in the preceding chapter, they also involve more risk in terms of volatility than these other asset classes. Therefore, common stocks are included in most investment portfolios for their superior returns, but ...

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