From the course: Cert Prep: CFA Exam Level 1
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Equity securities
From the course: Cert Prep: CFA Exam Level 1
Equity securities
- [Instructor] Equity securities represent ownership, and ownership comes in many forms. In this lesson, we'll break down the key types of equity securities, their characteristics, and what you need to know for the CFA Level I exam. Understanding these structures is essential for evaluating risk, return, and rights as an investor. So what are equity securities? Well, equity securities are financial instruments that signify ownership in a corporation. They typically entitle the holder to a share of profits through dividends, a share of residual assets if the company is liquidated, and voting rights in some cases. Equity comes in multiple flavors, each with its own risks and rewards. Starting with common shares. Common shares or common stock are the most basic form of equity. They give holders voting power on corporate matters, most notably electing the board of directors, the potential for capital appreciation,…
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