• Authorized stock
    • When a corporation is formed, it authorizes a fixed number of shares of stock in the company.
    • The stock is assigned a "par" value that is quite low, such as 10 cents or a dollar per share.
    • There is no correlation between the par value of a stock and its market value.

  • Issued stock
    • A corporation typically issues only a fraction of the number of shares that were authorized at the time it was created.
    • This permits the corporation to issue new stock as needed.

  • Outstanding stock
    • The number of shares actually trading in the market
    • Outstanding stock is equal to the amount of issued stock minus any Treasury stock.

  • Treasury stock
    • Any shares of issued stock that the corporation repurchases; a company might "buy back" its own shares for any of these reasons:
      • The market price of the stock is depressed, and the company can repurchase the shares at an effective discount.
      • Repurchasing the shares will increase the earnings per share since there will be fewer outstanding shares.
      • The Treasury shares can be used instead of cash to make required employee stock options or retirement plan contributions.


Look Out!
It\'s important to be able to distinguish between authorized, issued, outstanding and Treasury stock.

Common Stock Benefits

Related Articles
  1. Investing

    What are Issued Shares?

    Issued shares are the amount of authorized stocks a company’s shareholders buy and own. The annual report shows the number of outstanding shares.
  2. Investing

    What is Treasury Stock?

    Treasury stock is a company’s own stock that it holds in its treasury for later use.
  3. Investing

    The Basics Of Outstanding Shares And The Float

    We go over different types of shares and what investors need to know about them.
  4. Investing

    The Weighted Average Of Outstanding Shares

    The quantity of a company’s outstanding shares changes when it issues new shares, repurchases or retires existing ones, or converts others.
  5. Investing

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
  6. Investing

    Explaining Market Value of Equity

    Market value of equity is the total value of all the outstanding stock as measured in the stock market at a particular time.
  7. Investing

    Introduction to Treasury Securities

    Purchasing bonds that are backed by the full faith and credit of the U.S. government can provide steady guaranteed income and peace of mind. Knowing the characteristics of each type of treasury ...
  8. Investing

    Stock Buyback/Repurchase

    A stock buyback, or repurchase, occurs when a company buys its own shares off the market and therefore reduces the amount of stock outstanding.
  9. Investing

    The Impact Of Share Repurchases

    Share repurchases can impact investors and companies in different ways.
  10. Financial Advisor

    Advising FAs: How To Explaining Stocks to a Client

    Without a doubt, common stocks are one of the greatest tools ever invented for building wealth.
Frequently Asked Questions
  1. When are Beneficiaries of a Will Notified?

    Learn when the beneficiaries of a will must be notified, and understand how this requirement varies depending on whether ...
  2. Why Does Larry Page Pay Himself a $1 Salary?

    Google co-founder Larry Page continues to take an annual salary of only $1 as chief executive officer.
  3. What is Common Stock and Preferred Stock?

    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ...
  4. Can CareCredit be Used for Family Members?

    Learn more about the available options that CareCredit offers to pay for out-of-pocket medical procedures with little to ...
Trading Center