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CISI UNIT 2: Securities EXAM (A+Graded).
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CISI UNIT 2: Securities EXAM (A+Graded).
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CISI UNIT 2: Securities EXAM (A+Graded). Bloomberg, Reuters , third party administrators, IT consultants, Lawyers 3rd party vendors banks and brokers are part of the sell side asset managers are part of the buy side Professional sector business Markets, corporate insurance, fund management, investment banks - trading, banking, market making, research corporate finance, investment management, custodian banks Retail sector retail banking, pensions, insurance, investment services, custodians, financial planning and wealth management What is equity? A company can issue shares in order to raise capital Other names for shareholders shareholders, voting rights, owners Authorised share capital Authorised share capital is the maximum amount of capital that can be raised through share issue issued share capital number of shares the company has allotted o shareholders nominal value fixed legal value of a share, accounting term Market capitalisation number of shares multiplied by the market price free float Number of shares in the hands of the public - owners holding 5% or more of all shares - restricted stocks - insider holdings What kind of dividends do ordinary shares have? Variable What kind of dividends do preferred shares have? fixed Do ordinary shares have voting rights yes A/B shares, redeemable, partly paid Ordinary shares Cumulative, participating, convertible, redeemable Preferred shares Priority order upon liquidation Preferred, ordinary What are redeemable shares offered by a company to shareholders that may be bought back by the company at its election. Companies are permitted to issue ordinary shares that can be redeemed, as long as conventional non -redeemable ordinary shares are also in issue Partly paid each ordinary share has a nominal value, which represents the minimum amount that the company must receive from subscribers on the issue of the shares. Occasionally the company may not demand all the nominal value at issue, with the shares then referred to as being partly paid cumulative right to receive the dividend is rolled over into the next period participating opportunity for further dividend convertible right to convert into ordinary shares American depository receipts (ADR) A used by non -US companies in order to encourage US Dollar investments to buy an equity stake Features of an ADR US Dollar denominated and US dividend. Bearer document. Rights issue: ADR holders receive cash. Bonus issues: alters number of shares What is the settlement time of ADR T+2 What happpens at the pre -release of an ADR ? An ADR is secured by cash collateral rather than the deposited securities and can be issued in a pre -release format for upto 3 months What are the risks associated with ADR? Market and company sepcific risk and FX risk What is a warrant Right to subscribe for NEW shares from a company at a fixed price on a future date not part of ordinary share capital Why are warrants isseud? Issued as a sweetener with other investments (e.g. corporate debt) Can come in a detachable or non detachable form Conversion Premium = (Warrant price + Exercise price) - Current Share price What happens if the conversio figure is negative? The warrant is trading at a discount WHere are warrants traded? OTC/LSE When do warrants mature Normally > 1 year Where are warrants exercised? Physically settled contracts Who are covered warrants issued bty? Investment banks Who are options issued byThe benefits of buying summaries with Stuvia:
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