Foundations of the Securities
Industry
⩥ Issuer. Answer: An organization that distributes and sells
securities to investors
Example: Coca-Cola is the issuer of Coca-Cola stock.
⩥ Long. Answer: Finance jargon for owning a security
Example: the investor is long (owns) 100 shares of GE stock.
⩥ Going long. Answer: Finance jargon for purchasing ownership in a
security
Example: the investor goes long (buys) 100 shares of GE stock.
⩥ Outstanding shares. Answer: The number of shares held by the
company's shareholders
⩥ Equity. Answer: Formal term for ownership
⩥ Security. Answer: Legal term for a specific type of investment
Examples: common stocks, bonds, mutual funds, ETFs, options
,⩥ Statutory. Answer: A statutory voting structure allows
stockholders to apply only the amount of votes they have to each
BOD position. This type of voting structure is more beneficial for
larger stockholders.
The investor can only apply up to X# votes per open position
⩥ Cumulative. Answer: A cumulative voting structure allows
stockholders to apply the total number of votes they have to any
BOD position. This type of voting structure is more beneficial for
small stockholders.
The investor can apply up to X# votes in any manner
⩥ Board of Directors (BOD). Answer: * Responsible for the general
direction and success of a company
* Stockholders control who serves
⩥ Proxies. Answer: Voting materials used by investors unable to
attend the annual meeting
⩥ Statutory voting structure. Answer: * Applies votes on a per
position basis
* More beneficial for large stockholders
, ⩥ Cumulative voting structure. Answer: * Can apply all votes to one
position
* More beneficial for small stockholders
⩥ Issued Shares. Answer: Shares sold to investors. Once shares are
issued, they trade in the secondary market among investors.
⩥ Types of shares. Answer: Shares of stock are categorized into one
of four buckets:
* Authorized
* Issued
* Outstanding
* Treasury
⩥ Warrants. Answer: Warrants are similar to rights as they provide
the right to purchase shares from a publicly traded company at a
fixed price.
Warrants maintain a fixed exercise price, but at a premium to the
market price. Warrants have time value, meaning the length of time
they exist gives them value.
* Right to purchase new shares at a fixed price
* No intrinsic value at issuance
* Time value exists
Industry
⩥ Issuer. Answer: An organization that distributes and sells
securities to investors
Example: Coca-Cola is the issuer of Coca-Cola stock.
⩥ Long. Answer: Finance jargon for owning a security
Example: the investor is long (owns) 100 shares of GE stock.
⩥ Going long. Answer: Finance jargon for purchasing ownership in a
security
Example: the investor goes long (buys) 100 shares of GE stock.
⩥ Outstanding shares. Answer: The number of shares held by the
company's shareholders
⩥ Equity. Answer: Formal term for ownership
⩥ Security. Answer: Legal term for a specific type of investment
Examples: common stocks, bonds, mutual funds, ETFs, options
,⩥ Statutory. Answer: A statutory voting structure allows
stockholders to apply only the amount of votes they have to each
BOD position. This type of voting structure is more beneficial for
larger stockholders.
The investor can only apply up to X# votes per open position
⩥ Cumulative. Answer: A cumulative voting structure allows
stockholders to apply the total number of votes they have to any
BOD position. This type of voting structure is more beneficial for
small stockholders.
The investor can apply up to X# votes in any manner
⩥ Board of Directors (BOD). Answer: * Responsible for the general
direction and success of a company
* Stockholders control who serves
⩥ Proxies. Answer: Voting materials used by investors unable to
attend the annual meeting
⩥ Statutory voting structure. Answer: * Applies votes on a per
position basis
* More beneficial for large stockholders
, ⩥ Cumulative voting structure. Answer: * Can apply all votes to one
position
* More beneficial for small stockholders
⩥ Issued Shares. Answer: Shares sold to investors. Once shares are
issued, they trade in the secondary market among investors.
⩥ Types of shares. Answer: Shares of stock are categorized into one
of four buckets:
* Authorized
* Issued
* Outstanding
* Treasury
⩥ Warrants. Answer: Warrants are similar to rights as they provide
the right to purchase shares from a publicly traded company at a
fixed price.
Warrants maintain a fixed exercise price, but at a premium to the
market price. Warrants have time value, meaning the length of time
they exist gives them value.
* Right to purchase new shares at a fixed price
* No intrinsic value at issuance
* Time value exists
