Final answer:
Shareholders of common stock cannot manage a company directly, claim assets before creditors and preferred stockholders, or guarantee high capital gains. Stock transactions in the secondary market do not provide financial returns to the issuing company.
Step-by-step explanation:
With common stock, there are certain actions that shareholders cannot do. Firstly, shareholders of common stock do not have the ability to directly manage the day-to-day operations of a company. Instead, they vote to elect a board of directors who make major decisions and oversee management. Secondly, common stockholders cannot claim a company's assets before creditors and preferred stockholders in the event of liquidation. Last but not least, owning common stock does not guarantee high capital gains; high profits of a company do not always translate to high stock returns due to various market dynamics, including investor expectations, market saturation, and economic factors.
When discussing the buying and selling of stock, it's important to note that most transactions do not involve the firm originally issuing the stock. As explained with the analogy of buying a house, when you purchase shares of stock, you're buying ownership from the current owner. The company that issued the shares, such as General Motors in the example, does not receive any financial return from the sale between private parties in the secondary market.