Equity

From SquadLimberWiki

Money is raised through the sale of shares in a company.

The holder of an equity claim (shareholder) may receive variable income in the form of a dividend.

Shareholders will also receive capital gains if the value of the share increases by the time they sell the shares.

Contents 1 Common Stock (UK: Ordinary Shares) 1.1 Voting Rights 2 Preferred Stock (UK: Preference Shares) 2.1 Cumulative 2.2 Redeemable 2.3 Paricipating 2.4 Convertible 3 Dividends 3.1 Regular cash Dividends 3.2 Stock Dividends 3.3 Property Dividends 3.4 Dates 3.4.1 Declaration Date 3.4.2 With (Cum) - Dividend Date 3.4.3 Ex-Dividend Date 3.4.4 Record Date 3.4.5 Payment Date 4 Stock Split 5 Depository Receipts (DRs) 6 Exchange Traded Funds (ETFs)

Common Stock (UK: Ordinary Shares)

Common stock represents ownership in a corporation. Most popular form of stock (hence common).

Voting Rights

Common stockholders are entitled to vote for the board of directors, and any other important corporate issues during the year.

Preferred Stock (UK: Preference Shares)

Pays a specified dividend to the stockholder and ranks ahead of common stockholders in the event of liquidation.

No voting rights.

Cumulative

Most common - dividends accrue but are not paid. When payments resume preferred holders get paid before common.

Redeemable

Most preferred issues are redeemable - the issuer can buy the shares back a premium after a set date.

Paricipating

Most preferred issues are not Participating. Participating stockholders get a further share of the profits.

Convertible

The option to convert to common stock.

Dividends

Regular cash Dividends

A company's board of directors decides upon the size of a dividend payment. It is an arbitrary cash payment usually paid out quarterly or semi-annually.

Stock Dividends

Shareholders receive additional shares.

Property Dividends

Shareholders receive assets e.g. products or services that the company produces.

Dates

Declaration Date

Date the dividend is declared.

With (Cum) - Dividend Date

If you own stock on this date you will be entitled to the dividend.

Ex-Dividend Date

If you bought stock on or after this date you won't get the dividend. Stock price tends to fall on this date.

Record Date

The date on which the shareholders who receive dividend are recorded.

Payment Date

Date the dividend cheques are mailed.

Stock Split

Investors receive additional shares, but the value of each share is halved.

Depository Receipts (DRs)

Issued by a bank - represent ownership in a foreign company.

Exchange Traded Funds (ETFs)

Index funds designed to replicate performance of a market index - represent a basket of stocks.