About This Chapter
Understanding Equity Securities - Chapter Summary
This engaging chapter begins by looking at definitions of types of stocks and how to identify them. Then you'll look at specifics of common stock, penny stocks, and preferred stock - including the definitions, formulas, and rules that apply to them being explained. By the end of the chapter, you should be able to:
- Explain issuance, spinoffs, and stockholder rights for common stock
- List transaction rules and SEC rules for penny stocks
- Discuss types of preferred stock, their advantages, and stockholders' rights
- Understand voting rights and restrictions in stock ownership
- Describe electronic stock exchanges and auction markets
- Understand the types and characteristics of non-U.S. market securities
- Explain FINRA rules related to equity securities
Our professional instructors have designed this chapter to help you retain maximum information about equity securities. You may use as little or as much information from each self-paced lesson as you need. After completing each lesson, take the corresponding self-assessment quiz to make sure you are learning in an efficient manner.
1. Types of Stocks: Definition & Identification
Many people own stock, although most investors likely don't think much about where that stock came from. In this lesson, we will discuss the origin of stock through IPOs and the many types of stock.
2. Common Stock: Definition, Issuance & Formula
This lesson will provide you with a basic understanding of common stock, why and how companies issue stock, the potential for return on investment when investing, and how to calculate shareholder earnings.
3. Common Stock Transfers, Spinoffs & Stockholder Rights
All corporations are owned by common shareholders. That ownership comes with certain rights. As corporations grow and change, the ownership can change through new stock offerings, spinoffs and transfers.
4. Penny Stocks: Definition & Transaction Rules
In this lesson we will define penny stocks and explore the importance of the stock. We will also review basic transaction rules and the inherent risks of these transactions.
5. SEC Rules Related to Penny Stocks
Penny stocks are an exciting investment for the small investor. The stocks are cheaper and there is always the chance that the stock price will increase dramatically - but the investor might lose all his money.
6. What is Preferred Stock? - Definition, Types & Advantages
This lesson will define the hybrid investment security called preferred stock. The various types of preferred stocks will be explained and advantages of each will be explored.
7. Preferred Stockholder Rights
Preferred stock is a class of stock considered equity, and the preferred stockholder has some rights that common stockholders do not have. This lesson discusses the features of preferred stock and its advantages and disadvantages.
8. Stock Rights & Warrants: Ownership, Voting Rights & Restrictions
What are the rights of stockholders of common stocks vs preferred stocks? This lesson will cover the differences and go over warrants and preemptive rights.
9. Electronic Stock Exchanges & Auction Markets
The lesson deals with the different types of stock exchanges prevalent today. Learn about auction markets, electronic exchanges and over-the-counter exchanges.
10. Non-U.S. Market Securities: Types & Characteristics
The lesson deals with foreign investments in US markets. Learn the various tools for investing in international markets such as ADRs, foreign equity, etc.
11. FINRA Rules Related to Equity Securities
In this lesson, we will review FINRA rules related to equity securities as outlined in rules 2114, 2121, 2122, and 2124. There will be a short quiz following the lesson.
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Other chapters within the Series 7 Exam: Study Guide & Practice course
- Advertising & Public Communication in the Securities Industry
- The New Issues Market
- New Issue Regulations in the Securities Industry
- Brokerage Account Types & Restrictions
- Retirement Plans & Tax-Advantaged Accounts
- Handling Customer Investment Information & Discretionary Accounts
- Obtaining Supervisory Approvals for Investment Accounts
- Analyzing Customer Investment Profiles
- Analyzing Customer Financial Statements
- Tax Treatment of Equity Securities Transactions
- Packaged Investment Products
- Variable Life Insurance & Annuities
- Real Estate Investment Trusts
- Direct Participation Programs
- Understanding Options in Investing
- Debt Securities
- Investing in Corporate Bonds
- Municipal Securities
- Municipal Securities Analysis & Regulations
- Registered Hedge Funds
- Asset-Backed Securities
- U.S. Government Agency Securities
- Investment Product Disclosures
- Customer Updates & Record Retention
- Customer Transactions & Confirmations
- Transactional Delivery Obligations & Settlement Procedures
- Investment Disputes & Customer Complaints
- Addressing Margin Issues