Chapter 4: Equity Securities

Chapter summary

Chapter 4 covers equity securities: the rights of common and preferred shareholders, how ADRs work, market structure, and the tax treatment of dividends and capital gains. Preferred stock comes in several forms — cumulative, non-cumulative, participating, and convertible — and each has different rules. The ex-dividend and record dates determine who receives dividends. Preemptive rights protect existing shareholders from dilution.

Key concepts

• The Corporation
• Preferred Stock
• Penny Stock Regulations
• Derivative Securities
• American Depositary Receipts (ADRs)
• NYSE and Nasdaq-Listed Securities
• OTC Equities-Non-Exchange Securities
• Tax Issues Associated with Equity Securities
• Capital Gains and Losses
• The Corporation
• Preferred Stock
• Penny Stock Regulations

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