Explain 'common stock'.

Common stock represents a form of corporate equity ownership in a company, entitling shareholders to a portion of the company's assets and profits. When individuals purchase common stock, they are buying a share in the ownership of the company, and typically, they gain voting rights, which allow them to have a say in corporate governance, such as electing the board of directors.

Holders of common stock have the potential to benefit from capital appreciation as the value of the company's shares may increase over time, alongside potential dividends, which are payments made from the company's earnings to its shareholders. This type of investment forms a key part of an individual’s portfolio and indicates their stake in the company’s overall financial health and performance.

In contrast to corporate bonds, which are debt instruments and represent a loan made by investors to the issuer, common stock does not involve a debt obligation. Additionally, while common stock is linked to a company's equity, it does not serve as an indicator of the company's debts or a measure of future profits; those aspects are determined through other financial metrics like liabilities and profit forecasts. Therefore, the ownership and potential rewards connected with common stock make it an essential element of equity financing within corporate structures.