Securities

Asset(актив)

resources controlled by a company that can be used for producing positive value

Securities

Securities - tradable financial asset

Emitent or issuer - legal entity that developes and sells securities

Investor - person who buys security

Liability(обязательство) - quantity of value that somebody owes

investment can be regulated as a security if:

1. There is an investment of money.

2. The investment is made into a "common enterprise."

3. The investors expect to make a profit from their investment.

4. Any expected profits or returns are due to the actions of a third party or promoter.

Types of securities. Equity

difference between assets and liabilities (income is related to perfomance of a company)

\text{Equity = Assests - Liabilities}

Shares as an equity

Share(stock) - unit of ownership in a company

Capital stock - amount of shares that a company is authorized to issue according to its corporate charter

Only Public Companies can issues shares

Shareholder’s rights:

1. get dividends

2. voting power

3. ownership

4. rigth to transfer the ownership

5. right to inspect documents

	Common Stock	Preferred Stock
Voting Rights	Holders have voting rights in the company and can participate in decisions about corporate policies and the election of the board of directors.	Generally, holders do not have voting rights, although this can vary depending on the specific share terms.
Dividends	Not guaranteed and are paid out at the board of directors' discretion.	Usually fixed it must be paid before any dividends are given to common stockholders.
Liquidation Preference	Holders are last in line to claim any remaining assets, following bondholders and preferred stockholders.	Holders have a higher claim on assets and are paid out before common stockholders.
Convertibility	Cannot be converted into other forms of security.	May be converted to common shares based on terms.
Volatilability	Generally, more since it is more alert to company performance and market conditions.	Less, due to fixed dividends and a greater claim on assets.
Market Participation	Holders benefit directly from increases in the company's value.	Typically, do not participate in the company's growth beyond the fixed dividends.

Authorized & Outstanding shares

Outstanding share - company’s stock currently held by shreholders

• Include both share blocks held by investors and restricted shares

• Is not static and may flactuate

Used to calculate metrics like:

\text{Market Cap = Oustanding shares * Stock Price}

\text{Earnings per share = (Net Income - Preferred Dividends) ÷ Average Oustanding Common Shares}

\text{Cash flow per share = (Operating Cash Flow – Preferred Dividends) ÷ Common Shares Outstanding}

Authorized shares - total amount of shares issued by a compony

Types of securities. Debt

borrowed money that must be repaid (bonds, Cds, CDOs)

• issued for a fixed term with regular paymnet - interest

• can be secured and unsecured

(bank or money from a big company)

Types of securities. Hybrid security and Derivative

Hybrid security

combine charesteristics of both

• Convertible bond - may be converted into common stock. Price rises and falls with stock

• fixeв or floating rates

• dividens or interest

Derivative

Type of contract whose price is determined by the value of underlying asset, like stock, bond .

• Call options - gain value if the underlying asset appriciates

• Put options - gain value if the underlying asset looses value

Additional info

Publicly traded securtities are lised on stock echanges. But they can also be offered to the restricted and qualified group called private placement

In the secondary market aka aftermarket securities are transefered as assets from one investor to another. They can be sold for cash or capital gain

Buying on a marging - purchasing securities with borrowed money