Corporate Ownership: Equity Securities
IN THIS CHAPTER
Understanding the types of equity securities
Comparing common stock to preferred stock
Calculating certain values for stock questions
Equity securities — such as common and preferred stock — represent ownership interest in the issuing company. All publicly held corporations issue equity securities to investors. Investors love these securities because they’ve historically outperformed most other investments, so an average (or above-average, in your case) stockbroker sells more of these types of securities than any other kind.
The SIE exam tests you on your ability to recognize the types of equity securities and on some other basic information. Although you may find that the SIE doesn’t test you heavily on the info provided here, this chapter forms a strong foundation for many other chapters in the book. I think that you’ll find it difficult (if not impossible) to understand what an option or mutual fund is if you don’t know what a stock is. Needless to say, even though this chapter is small, don’t ignore it or it may come back to bite you.
Beginning with the Basics: Common Stock
Corporations issue common stock (as ...