The equity premium puzzle is a term used to describe the fact that, over long periods of time, stocks have outperformed other investments such as bonds. This outperformance is often referred to as the equity risk premium. The equity premium puzzle is a bit of a mystery because it is not clear why stocks should … Read more
Cross-listing refers to the practice of listing a security on more than one exchange. This can be done for a number of reasons, including to broaden the pool of potential investors, to increase liquidity, or to take advantage of different regulatory regimes. What is cross-listed companies? A cross-listed company is a company that has its … Read more
A realized gain is a profit that results from the sale of a security or other asset. The term is used to distinguish these gains from unrealized gains, which are profits that exist on paper but have not yet been realized through a sale. In order for a gain to be realized, the asset must … Read more
The Residual Equity Theory is a theory that states that the equity of a firm is the residual value of the firm’s assets after all liabilities have been paid. This theory is based on the assumption that the goal of the firm’s management is to maximize shareholder value. Under this theory, the value of the … Read more
The term “When Issued (WI)” refers to the period of time between the announcement of a security and its actual issuance. During this time, the security is said to be “when issued.” This period can last for a few days or even weeks. WI is commonly used for new issues of stock, bonds, and other … Read more
Capital surplus is the portion of a company’s equity that is in excess of the par value of its common stock. Capital surplus can arise from the sale of stock at a price above par, the issuance of stock at a price below par, or the conversion of convertible securities into common stock. Capital surplus … Read more
A renounceable right is a right that can be transferred or sold by the holder to another party. This type of right is often attached to shares of stock, giving the holder the ability to sell or transfer their shares to someone else without having to go through the process of selling the entire company. … Read more
An offering price is the price of a security or other asset when it is first offered for sale. The offering price is usually set by the issuer of the security and may be different from the price at which the security trades in the secondary market. For example, a company may issue new shares … Read more
Preferred Stock. What is Common Stock? Different Types of Common Stock Preferred Stock vs. Common Stock What are 3 key features of common stock? The three key features of common stock are voting rights, dividends, and capital gains. Voting rights: Common stockholders have the right to vote on corporate matters, such as the election of … Read more
A tracking stock is a type of common stock that tracks the performance of a specific business unit or group of assets within a company, rather than the company as a whole. Tracking stocks are often used by companies to spin off specific businesses or to raise capital for specific projects. Tracking stocks come with … Read more
