Equity Securities Market
Equity Securities Market
Equity Securities Market
3. Corporation
Equity – refers to the difference between the assets - Legal entity has a personality separate
and liabilities of a company. It represents and distinct from the
ownership of a firm. owners/shareholders.
Equity Instrument – type of financial instrument - Limited liability
wherein the issuer agrees to pay an amount to the - Ownership in corporations is evidenced
investor in the future based on the future earnings through shares.
of the company, if any. Why Invest in Equity Instruments?
Shares – represents ownership in a company. 1. Capital Appreciation
Shareholder or Stockholder – individual or a party - Rise in the value of an asset in relation
who owns a share. to the increase in its market price.
- The price at which they can trade is
Stock Certificates – legal document which certifies based on the interaction of different
the ownership of specific number of shares of a market factors.
corporation, is given to shareholders. 2. Dividends
Authorized Capital Stock – total maximum amount - Payments made by corporations to
shareholders representing excess
stated in the Articles of Incorporation that can be
subscribed to or paid by investors of a corporation earnings of the company.
- It is distributed to shareholders based on
if the shares have a par value.
discretion and approval of the board of
Par Value – nominal value of the share that is directors.
indicated in the face of the stock certificate. - Cash is the most common type of
dividend.
Outstanding Share – total shares of stock issued
- It is only paid out once all claims from
under binding subscription agreements to
debt such as maturing interest and
subscribers or stockholders, whether partially or fully
principal repayments are settled.
paid.
✓ Conventional Brokerage
✓ Online Trading
✓ Mutual Funds
Share Valuation