A designation applied to a specified type of security such as common stock or mutual fund units. Companies that have more than one class of common stock usually identify a given class with alphabetic markers, such as "Class A" shares and "Class B" shares. Different share classes within the same entity typically confer different rights on their owners. Taobiz explains Share Class For example, a public company may offer two classes of common stock outstanding: Class A common stock and Class B common stock. This dual-class structure is typically decided on when a company first goes public and issues stock in the primary market. For example, a private company that is undertaking an initial public offering (IPO) may choose to issue Class A shares to its new investors, while the original owners of the company receive Class B shares. In this case, the Class B shares would typically have enhanced voting rights. A dual-class structure such as this would be used if the original owners of the company wanted to sell the majority of their ownership stake in the firm, but still maintain majority voting rights. As an investor, it's important to know what class of shares you are buying when you purchase common stock in a public company.
A share certificate is a written document signed on behalf of a corporation, and serves as legal proof of ownership of the number of shares indicated. Also referred to as a "stock certificate". Taobiz explains Share Certificate In modern financial markets, individual investors rarely take physical possession of their share certificates. "Scripophily" is a term that signifies the collecting of share certificates and other forms of paper based financial securities. Similar to stamp collecting or bank note collecting, a share certificate's value is dependent on its condition and age.
Funds raised by issuing shares in return for cash or other considerations. The amount of share capital a company has can change over time because each time a business sells new shares to the public in exchange for cash, the amount of share capital will increase. Share capital can be composed of both common and preferred shares. Also known as "equity financing". Taobiz explains Share Capital The amount of share capital a company reports on its balance sheet only accounts for the initial amount for which the original shareholders purchased the shares from the issuing company. Any price differences arising from price appreciation/depreciation as a result of transactions in the secondary market are not included. For example, suppose ABC Inc. raised $2 billion from its initial public offering. Over the next year, the total value of its shares increases to $5 billion. In this case, the value of the share capital is still only $2 billion because ABC Inc. had received only $2 billion from the sale of its securities to the investing public.
The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities Regulatory Commission (CSRC). Stocks, funds and bonds are all traded on the exchange, which has listing requirements including that a company must be in business and be earning a profit for at least three years before joining the exchange. Taobiz explains Shanghai Stock Exchange Two main classes of stock for every listed company are traded on the exchange: A-shares and B-shares. B-shares are quoted in U.S. dollars, and are generally open to foreign investment. A-shares are quoted in yuan, and are only available to foreign investment through a qualified program known as QFII. The largest stock exchange for Chinese equities is actually the Hong Kong Exchange, which has been trading H-shares in Chinese companies for many years; these equities have also been open to foreign investment. Most of the total market cap of the Shanghai Stock Exchange is made up of formerly state-run companies like major commercial banks and insurance companies. Many of these companies have only been trading on the exchange since 2001.
An unregulated private market in which investors can purchase shares in companies that are not currently publicly traded. Shadow markets in stocks give investors an opportunity to invest in companies prior to their initial public offerings (IPO). However, the SEC requires investors to have a net worth greater than $1 million in order to participate in this nontransparent market. These people are what the SEC refers to as "accredited investors". Taobiz explains Shadow Market The main benefit of using the shadow market to purchase shares is that the accredited investor can get exposure to certain companies much earlier than most other investors. This greatly increases the potential profit for the investor if the stock goes public and demand from average investors drives the stock price up. Some of the downsides of the shadow market include lack of liquidity, lack of disclosure from the company, and a greater degree of uncertainty and risk.
The period of time between the settlement date and the transaction date that is allotted to the parties of a transaction to satisfy the transaction's obligations. The buyer must make payment within the settlement period, while the seller must deliver the purchased security within this period. Taobiz explains Settlement Period Depending on the type of security traded, the exact length of the settlement period will differ. The settlement period is often quoted as T+1, T+2 or T+3; which means the transaction date plus one, two or three days. For stocks, the settlement period is three days (T+3) after the transaction. This means that the buyer must transfer cash to the seller, and the seller must transfer ownership of the stock to the buyer within three days after the trade was made. For certificates of deposit and commercial paper, the transaction must be settled on the same day. For U.S. treasuries, it is the next day (T+1), and forex transactions are settled two days after (T+2).
1. The date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller. 2. The payment date of benefits from a life insurance policy. Taobiz explains Settlement Date The settlement date for stocks and bonds is usually three business days after the trade was executed. For government securities and options, the settlement date is usually the next business day.
A measure of stock liquidity calculated by dividing the total number of shares traded over a period by the average number of shares outstanding for the period. The higher the share turnover, the more liquid the share of the company. Taobiz explains Share Turnover For example, if the total amount of shares traded over the year was 10 billion and the average amount of shares outstanding for the year was 100 million, the share turnover for the year is 100 times.
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