Reading: The Equities Securities Market
Equity
Securities
Common Stock & Shares of Corporate
Ownership
•Common
Stocks represent shares of ownership in a corporation.
•Common
stock is also known as equities and equity securities.
•
Each share represents a portion of ownership in the company and a vote on
corporate governance matters.
•Common
stock is issued by corporations to raise money.
•When
a corporation issues stock for the first time it is known as an “initial public
offering” (IPO).
•Market
value of common stock is based on the expected future earnings of the company.
•Common
stock that is not publicly traded is referred to as “closely held” and the
owners are usually directly involved in the company’s management.
Corporations Board of Directors &
Management
•Corporations
are controlled by a Board of Directors.
•The
operations of the corporation are run by managers who are selected by the Board
of Directors.
•The
Board of Directors oversees the performance of the managers.
•Publicly
traded companies are required to hold an annual meeting at with the Board of
Directors are elected.
•Members
who are not able to attend the annual meeting can vote via Proxy. The proxy
gives another shareholder the power to vote on their behalf or as the
shareholder directs them to vote.
Stock Market Listings
Stock Market Listings
Preferred
Stock
•Preferred
stock are nonvoting shares of stock that, like bonds, usually receive a steady
stream of dividend payments each year.
•Preferred
stock is also similar to bonds as it does not give the shareholder voting power
on issues voted on by owners.
•Dividends
of preferred stock are cumulative. Unpaid dividends build-up over time and must
be paid in full before any dividends can be paid on common stock.
•Dividends
are not tax deductible.
•Preferred
stock can be callable meaning that the issuing firm can buy them back from the
stockholder to avoid making any further dividend payments.
Last modified: Tuesday, August 14, 2018, 8:37 AM