Series 7

Equities - Other Equities

You also need to be familiar with the following equity instruments:
  • Rights offerings present common stock to current shareholders at a discount. Rights can be exercised, sold to another party or given as gifts. They cannot be sold back to the company for cash. If rights are not exercised during a brief window of opportunity, they simply expire.
    The article Understanding Rights Issues details the various options available to investors when a company issues rights.

  • Warrants are certificates entitling a bondholder to buy other securities, at some point in the future, at a specific price above the current market price. If the price of the security exceeds the warrant's exercise price, then the investor can buy the security at that price and resell it immediately at a profit.

    Warrants generally have longer expiration periods than rights do, and they may have no expiration date at all. They can be detached from, and traded separately from, the bonds with which they were issued.

    Discover the advantages of this high-return investment tool within the article What Are Warrants?

  • American Depository Receipts (ADRs) are issued by U.S. banks and represent shares of a foreign stock traded on a U.S. exchange. For American investors, ADRs help to simplify the process of investing in foreign companies by denominating the investment in dollars, providing a more convenient local market and lowering transaction costs.

    Learn more about these securities within the article: What Are Depository Receipts?



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