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A stock, also known as equity, is a type of security representing ownership in a corporation. Ownership of the company is split up into potentially millions of pieces and investors can buy the pieces. Each piece is called a share, or stock. The proportion of how much an investor owns is measured through these units of stock.
Capital stock is not necessarily equal to the number of shares that are currently outstanding; capital stock is the maximum number of shares that can ever be outstanding. If companies want to change this number, they must amend their charters. When companies do this, it may be an indication that companies intend to raise capital. Capital stock ...
Small-cap stock refers to a company with a market capitalization (calculated by taking a firm's current share price and multiplying that figure by the total number of shares outstanding) near the low end of the publicly traded spectrum. The boundaries that separate these classifications are not clearly defined and can vary according to the ...
Barter Example. The barter system enables two parties to exchange goods or services based on mutually perceived value. To illustrate, a plumber can fix a baker’s sink, for which the baker would normally have paid $100 for the service. Instead, the baker gives the plumber $100 worth of his baked goods. Another example would be a photographer ...
Bond face values are usually $1,000, and preferred stock face values are usually $25. Some bond and preferred stock maturities are short-term (a year or less), others are intermediate-term (usually two to 10 years) and many are long-term (a period of 10 to 30 years or more). Bonds with maturities of less than 10 years are typically called notes.
Preferred stock is a good alternative for risk-averse investors wanting to buy equities. In general, they are less volatile then common stock and provide a better stream of dividends. Most preferred shares are also callable, meaning the issuer can redeem the shares at any time, so they provide investors with more options than common shares.
A bond is an agreement between an investor and the company, government, or government agency that issues the bond. When investors buy a bond, they are loaning money to the issuer in exchange for interest and the return of principal at maturity. Because bonds traditionally pay the investor a fixed interest rate periodically, they are also known ...
In investing, equity refers to stock as ownership in a corporation. In corporate finance, equity (more commonly referred to as shareholders’ equity) refers to the amount of capital contributed by the owners. Put another way, equity is the difference between a company’s total assets and total liabilities. In real estate, equity refers to the ...
Treasury Stock Example. Let's assume Company XYZ decides to buy back some of its shares because it feels that Company XYZ shares are undervalued in the market right now. When Company XYZ acquires those shares, they become treasury stock. Treasury stock appears at cost or at par value in the shareholders equity section of the balance sheet and ...
Outstanding shares are used in the calculation of market capitalization (outstanding shares multiplied by current share price) and earnings per share (EPS calculated as outstanding shares divided by earnings), two major measures of a company's value and performance used by investors. Outstanding shares are common stock authorized by the company ...