Assessable Stock

DEFINITION of 'Assessable Stock'

A class of stock in which the issuing company is allowed to impose levies on stockholders for more funds. In the past, there was no restriction on how much additional money a company could demand or on how often a company could impose a levy on its stocks.

These are the opposite of non-assessable stocks.

BREAKING DOWN 'Assessable Stock'

Before the twentieth century, assessable stocks were the prevalent type of equity that companies would issue. In order to entice investors into buying this potentially expensive stock, issuers would initially sell the stock at a discount.

For example, an assessable stock has an initial capitalization of $20, but the issuer would sell the stock with a 75% discount ($5). Naturally, seeing how the issuer only received a small fraction of the capitalization, companies would almost always come back to investors for more money. In some cases, companies would eventually take more money than the value of the stock.

However, because all stocks issued today are non-assessable stocks, investors should not have to worry about a company making demands for more money.

RELATED TERMS
  1. Non-Assessable Stock

    A class of stock in which the issuing company is not allowed ...
  2. Non-Assessable Policy

    A type of insurance policy that cannot require the policyholder ...
  3. Assessable Capital Stock

    The capital stock of any bank or financial institution that could ...
  4. Joint Stock Company

    An organization that falls between the definitions of a partnership ...
  5. Stock Market

    The market in which shares of publicly held companies are issued ...
  6. Impose

    The act of placing a fee, levy, tax or charge on an asset or ...
Related Articles
  1. Investing

    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.
  2. Home & Auto

    How Property Taxes Are Calculated

    Property taxes are calculated through use of the mill levy and the assessed property values.
  3. Investing Basics

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  4. Investing Basics

    A Breakdown on How the Stock Market Works

    Learn what it means to own stocks and shares, why shares exist, and how you buy and sell them.
  5. Investing Basics

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
  6. Options & Futures

    20 Investments: Common Stock

    What Is It? Stock is sometimes referred to as shares, securities or equity. Simply put, common stock is ownership in part of a company. For every stock you own in a company, you own a small piece ...
  7. Investing Basics

    Income, Value and Growth Stocks

    Investors who buy stocks generally seek one of three criteria: undervalued holdings, growth potential or steady income. The characteristics of stocks in each of these categories differs accordingly.
  8. Analyzing The Best Retirement Plans And Investment Options: Stocks

    What they are: Securities that represent ownership in the corporation that issued the stock. Stocks are also called equities. Pros: Capital appreciation; often outperform other investments; ...
  9. Home & Auto

    This Is How Property Taxes Are Calculated

    Understanding how property taxes work will ensure that you won't be overcharged.
  10. Active Trading

    Buy High, Sell Much Higher

    Value investing may seem fool-proof, but it carries more risk than you might know.
RELATED FAQS
  1. What is the difference between the equity market and the stock market?

    Discover the basic information about the equity, or stock, market and the two primary classifications of equities that are ... Read Answer >>
  2. Why is an increase in capital stock on a company's balance sheet a bad sign for stockholders?

    Understand what capital stock represents for a company and understand the significance for investors when a company initiates ... Read Answer >>
  3. What are some examples of preferred stock, and why do companies issue it?

    Understand the difference between preferred stock and common stock, and learn the primary reasons why companies issue preferred ... Read Answer >>
  4. How does the law of supply and demand affect the stock market?

    Find out how the law of supply and demand affects the stock market, and how it determines the prices of individual stocks ... Read Answer >>
  5. Does stockholders equity accurately reflect a company's worth?

    Learn whether stockholders' equity accurately reflects a company's worth. Stockholders' equity is found by taking the difference ... Read Answer >>
  6. When does a growth stock turn into a value opportunity?

    Learn how fundamental analysts use valuation measures, such as the price-to-earnings ratio, to identify when a growth stock ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center