Introduction to Equity
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1. What is Equity
Let us start out by understanding what equity is; the concept that equity confers ownership
2. Benefits of Ownership
Investors invest for returns and benefits. Whata are the benefits of owning equity shares?
3. Earnings per Share
If equity represents ownership of a business, the performance of the business is a key measure. The profits that accrue to each share is called Earnings per Share. Understand it well and quickly!
4. Dividends
A Dividend is the cash thjat a shareholder gets, when the company distributes the profits that it earns incash. Understand how dividends are declared and how to calculate the dollar value of declared dividends
5. Bonus
Profitable companies face demands for larget payouts. But the company might not have cash to distribute dividends. It might propose issuing bons shares. Here is how that works
6. The Paradox of Enterprise
While businesses are started to generate profits from economic activity, generating more money than it can use can become a headache for a company. It sets the stage for a buyback. Understand how profits can become a problem
7. Buybacks
Buybacks are a reward to shareholders. It is also a means to dispose off excessive cash and profits. Understand the impact of a buyback on the number of shares and EPS.
8. Treasury Stock
Buybacks result in the creatuion of Treasury Stock. Inderstand that concept here.
9. Rights Issue
On the other hand growing companies need additional capital. Existing shareholders have a right to participate in a company's growth plans. Understand how Rights Issues work.
10. Preferential issue
Preferential issues as opposed to a Rights issue, brings in money from specific, new investors; leaving out existing shareholders
11. Warrants
Warrants issued by a growing company with strong future prospects smoothen the capital raising path for the company. Here is how that works.
12. ADR & GDR
ADRs and GDRs allow companies to access overseas investors in a manner convenient to both company and investor
13. Preferred Stock
Preferred Stock is a hybrid instrument which has features of both equity and debt. Understand the nature of this instrument really quickly
14. Securities Identifiers
Equity instruments are identified using a very spedific international identifier. Knowing instrument ISIN is important in avoiding mistakes in referring to a particular security
15. Risks in Equity
Equity is risky! Everyone knows that. But here, we discuss the various types of risk that are seen in equities.
16. Valuation Concepts
Intelligent investors select the shares that they might buy using performance criteria and would like ot buy at the correct price. What is the simplest understanding of the correct price at which to buy a share? Here is a quick look at those considerations