In finance, a bond is an instrument of indebtedness of the bond issuer to the holders. The most common types of bonds include corporate bonds; the bond is a debt security, under which the issuer owes the holders a debt and is obliged to pay them interest or to repay the principal at a date, termed the maturity date. Interest is payable at fixed intervals; the bond is negotiable, that is, the ownership of the instrument can be transferred in the secondary market. This means that once the transfer agents at the bank medallion stamp the bond, it is liquid on the secondary market, thus a bond is a form of loan or IOU: the holder of the bond is the lender, the issuer of the bond is the borrower, the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit or short-term commercial paper are considered to be money market instruments and not bonds: the main difference is the length of the term of the instrument.
Bonds and stocks are both securities, but the major difference between the two is that stockholders have an equity stake in a company, whereas bondholders have a creditor stake in the company. Being a creditor, bondholders have priority over stockholders; this means they will be repaid in advance of stockholders, but will rank behind secured creditors, in the event of bankruptcy. Another difference is that bonds have a defined term, or maturity, after which the bond is redeemed, whereas stocks remain outstanding indefinitely. An exception is an irredeemable bond, such as a consol, a perpetuity, that is, a bond with no maturity. In English, the word "bond" relates to the etymology of "bind". In the sense "instrument binding one to pay a sum to another", use of the word "bond" dates from at least the 1590s. Bonds are issued by public authorities, credit institutions and supranational institutions in the primary markets; the most common process for issuing bonds is through underwriting. When a bond issue is underwritten, one or more securities firms or banks, forming a syndicate, buy the entire issue of bonds from the issuer and re-sell them to investors.
The security firm takes the risk of being unable to sell on the issue to end investors. Primary issuance is arranged by bookrunners who arrange the bond issue, have direct contact with investors and act as advisers to the bond issuer in terms of timing and price of the bond issue; the bookrunner is listed first among all underwriters participating in the issuance in the tombstone ads used to announce bonds to the public. The bookrunners' willingness to underwrite must be discussed prior to any decision on the terms of the bond issue as there may be limited demand for the bonds. In contrast, government bonds are issued in an auction. In some cases, both members of the public and banks may bid for bonds. In other cases, only market makers may bid for bonds; the overall rate of return on the bond depends on the price paid. The terms of the bond, such as the coupon, are fixed in advance and the price is determined by the market. In the case of an underwritten bond, the underwriters will charge a fee for underwriting.
An alternative process for bond issuance, used for smaller issues and avoids this cost, is the private placement bond. Bonds sold directly to buyers may not be tradeable in the bond market. An alternative practice of issuance was for the borrowing government authority to issue bonds over a period of time at a fixed price, with volumes sold on a particular day dependent on market conditions; this was called a tap bond tap. Nominal, par, or face amount is the amount on which the issuer pays interest, which, most has to be repaid at the end of the term; some structured bonds can have a redemption amount, different from the face amount and can be linked to the performance of particular assets. The issuer has to repay the nominal amount on the maturity date; as long as all due payments have been made, the issuer has no further obligations to the bond holders after the maturity date. The length of time until the maturity date is referred to as the term or tenor or maturity of a bond; the maturity can be any length of time, although debt securities with a term of less than one year are designated money market instruments rather than bonds.
Most bonds have a term of up to 30 years. Some bonds have been issued with terms of 50 years or more, there have been some issues with no maturity date. In the market for United States Treasury securities, there are three categories of bond maturities: short term: maturities between one and five years; the coupon is the interest rate. This rate is fixed throughout the life of the bond, it can vary with a money market index, such as LIBOR, or it can be more exotic. The name "coupon" arose because in the past, paper bond certificates were issued which had coupons attached to them, one for each interest payment. On the due dates the bondholder would hand in the coupon to a bank in exchange for the interest payment. Interest can be paid at different frequencies: semi-annual, i.e. every 6 months, or annual. The yield is the rate of return received from investing in the bond, it refers either to The current yield, or running yield
Initial public offering
Initial public offering or stock market launch is a type of public offering in which shares of a company are sold to institutional investors and also retail investors. Through this process, colloquially known as floating, or going public, a held company is transformed into a public company. Initial public offerings can be used: to raise new equity capital for the company concerned. After the IPO, shares traded in the open market are known as the free float. Stock exchanges stipulate a minimum free float both in absolute terms and as a proportion of the total share capital. Although IPO offers many benefits, there are significant costs involved, chiefly those associated with the process such as banking and legal fees, the ongoing requirement to disclose important and sometimes sensitive information. Details of the proposed offering are disclosed to potential purchasers in the form of a lengthy document known as a prospectus. Most companies undertake an IPO with the assistance of an investment banking firm acting in the capacity of an underwriter.
Underwriters provide several services, including help with assessing the value of shares and establishing a public market for shares. Alternative methods such as the Dutch auction have been explored and applied for several IPOs; the earliest form of a company which issued public shares was the case of the publicani during the Roman Republic. Like modern joint-stock companies, the publicani were legal bodies independent of their members whose ownership was divided into shares, or partes. There is evidence that these shares were sold to public investors and traded in a type of over-the-counter market in the Forum, near the Temple of Castor and Pollux; the shares quaestors. Mere evidence remains of the prices for which partes were sold, the nature of initial public offerings, or a description of stock market behavior. Publicani lost favor with the rise of the Empire. In the early modern period, the Dutch were financial innovators who helped lay the foundations of modern financial systems; the first modern IPO occurred in March 1602 when the Dutch East India Company offered shares of the company to the public in order to raise capital.
The Dutch East India Company became the first company in history to issue bonds and shares of stock to the general public. In other words, the VOC was the first publicly traded company, because it was the first company to be actually listed on an official stock exchange. While the Italian city-states produced the first transferable government bonds, they did not develop the other ingredient necessary to produce a fledged capital market: corporate shareholders; as Edward Stringham notes, "companies with transferable shares date back to classical Rome, but these were not enduring endeavors and no considerable secondary market existed."In the United States, the first IPO was the public offering of Bank of North America around 1783. When a company lists its securities on a public exchange, the money paid by the investing public for the newly-issued shares goes directly to the company as well as to any early private investors who opt to sell all or a portion of their holdings as part of the larger IPO.
An IPO, allows a company to tap into a wide pool of potential investors to provide itself with capital for future growth, repayment of debt, or working capital. A company selling common shares is never required to repay the capital to its public investors; those investors must endure the unpredictable nature of the open market to price and trade their shares. After the IPO, when shares are traded in the open market, money passes between public investors. For early private investors who choose to sell shares as part of the IPO process, the IPO represents an opportunity to monetize their investment. After the IPO, once shares are traded in the open market, investors holding large blocks of shares can either sell those shares piecemeal in the open market or sell a large block of shares directly to the public, at a fixed price, through a secondary market offering; this type of offering is not dilutive. Once a company is listed, it is able to issue additional common shares in a number of different ways, one of, the follow-on offering.
This method provides capital for various corporate purposes through the issuance of equity without incurring any debt. This ability to raise large amounts of capital from the marketplace is a key reason many companies seek to go public. An IPO accords several benefits to the private company: Enlarging and diversifying equity base Enabling cheaper access to capital Increasing exposure and public image Attracting and retaining better management and employees through liquid equity participation Facilitating acquisitions Creating multiple financing opportunities: equity, convertible debt, cheaper bank loans, etc. There are several disadvantages to completing an initial public offering: Significant legal, account
Finance is a field, concerned with the allocation of assets and liabilities over space and time under conditions of risk or uncertainty. Finance can be defined as the art of money management. Participants in the market aim to price assets based on their risk level, fundamental value, their expected rate of return. Finance can be split into three sub-categories: public finance, corporate finance and personal finance. Matters in personal finance revolve around: Protection against unforeseen personal events, as well as events in the wider economies Transference of family wealth across generations Effects of tax policies management of personal finances Effects of credit on individual financial standing Development of a savings plan or financing for large purchases Planning a secure financial future in an environment of economic instability Pursuing a checking and/or a savings account Personal finance may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance and saving for retirement.
Personal finance may involve paying for a loan, or debt obligations. The six key areas of personal financial planning, as suggested by the Financial Planning Standards Board, are: Financial position: is concerned with understanding the personal resources available by examining net worth and household cash flows. Net worth is a person's balance sheet, calculated by adding up all assets under that person's control, minus all liabilities of the household, at one point in time. Household cash flows total up all from the expected sources of income within a year, minus all expected expenses within the same year. From this analysis, the financial planner can determine to what degree and in what time the personal goals can be accomplished. Adequate protection: the analysis of how to protect a household from unforeseen risks; these risks can be divided into the following: liability, death, disability and long term care. Some of these risks may be self-insurable, while most will require the purchase of an insurance contract.
Determining how much insurance to get, at the most cost effective terms requires knowledge of the market for personal insurance. Business owners, professionals and entertainers require specialized insurance professionals to adequately protect themselves. Since insurance enjoys some tax benefits, utilizing insurance investment products may be a critical piece of the overall investment planning. Tax planning: the income tax is the single largest expense in a household. Managing taxes is not a question of if you will pay taxes, but when and how much. Government gives many incentives in the form of tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments use a progressive tax; as one's income grows, a higher marginal rate of tax must be paid. Understanding how to take advantage of the myriad tax breaks when planning one's personal finances can make a significant impact in which can save you money in the long term. Investment and accumulation goals: planning how to accumulate enough money – for large purchases and life events – is what most people consider to be financial planning.
Major reasons to accumulate assets include purchasing a house or car, starting a business, paying for education expenses, saving for retirement. Achieving these goals requires projecting what they will cost, when you need to withdraw funds that will be necessary to be able to achieve these goals. A major risk to the household in achieving their accumulation goal is the rate of price increases over time, or inflation. Using net present value calculators, the financial planner will suggest a combination of asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate of inflation, the investment portfolio has to get a higher rate of return, which will subject the portfolio to a number of risks. Managing these portfolio risks is most accomplished using asset allocation, which seeks to diversify investment risk and opportunity; this asset allocation will prescribe a percentage allocation to be invested in stocks, bonds and alternative investments.
The allocation should take into consideration the personal risk profile of every investor, since risk attitudes vary from person to person. Retirement planning is the process of understanding how much it costs to live at retirement, coming up with a plan to distribute assets to meet any income shortfall. Methods for retirement plans include taking advantage of government allowed structures to manage tax liability including: individual structures, or employer sponsored retirement plans and life insurance products. Estate planning involves planning for the disposition of one's assets after death. There is a tax due to the state or federal government at one's death. Avoiding these taxes means that more of one's assets will be distributed to one's heirs. One can leave one's assets to friends or charitable groups. Corporate finance deals with the sources of funding and the capital structure of corporations, the actions that managers take to increase the value of the firm to the shareholders, the tools and analysis used to allocate financial resources.
Although it is in principle different from managerial finance which studies the financial management of all firms, rather than corporations alone, the main concepts in the study of corporate finance are applicable to the financial problems of all kinds of firms. Corporate f
Funding is the act of providing financial resources in the form of money, or other values such as effort or time, to finance a need and project by an organization or company. This word is used when a firm uses its internal reserves to satisfy its necessity for cash, while the term financing is used when the firm acquires capital from external sources. Sources of funding include credit, venture capital, grants, savings and taxes. Fundings such as donations and grants that have no direct requirement for return of investment are described as "soft funding" or "crowdfunding". Funding that facilitates the exchange of equity ownership in a company for capital investment via an online funding portal as per the Jumpstart Our Business Startups Act is known as equity crowdfunding. Funds can be allocated for either long-term purposes. In economics funds are injected into the market as capital by lenders and taken as loans by borrowers. There are two ways; the lender can lend the capital to a financial intermediary against interest.
These financial intermediaries reinvest the money against a higher rate. The use of financial intermediaries to finance operations is called indirect finance. A lender can go the financial markets to directly lend to a borrower; this method is called direct finance. It is used in fields of technology or social science. Research funding can split into non-commercial. Research and development departments of a corporation provide commercial research funding. Whereas, non-commercial research funding is obtained from charities, research councils, or government agencies. Organisations that require such funding have to go through competitive selections. Only those that have the most potential would be chosen. Funding is vital in ensuring the sustainability of certain projects. Entrepreneurs with a business concept would want to accumulate all the necessary resources including capital to venture into a market. Funding is part of the process, as some businesses would require large start-up sums that individuals would not have.
These start-up funds are essential to kick-start a business idea, without it, entrepreneurs would not have the ability to carry out their concepts in the business world. Fund management companies gather pools of money from many investors and use them to purchases securities; these funds are managed by professional investment managers, which may generate higher returns with reduced risks by asset diversification. The size of these funds could be a little as a few millions or as much as multibillions; the purpose of these funding activities is aiming to pursue individual or organization profits. Government could allocate funds itself or through government agencies to projects that benefit the public through selection process to students or researchers and organisations. At least two external peer-reviewers and internal research award committee review each application; the research awards committee would meet some time to discuss shortlisted applications. A further shortlist and ranking is made. Projects are funded and applicants are informed.
Crowdfunding exists in two types, reward-based crowdfunding and equity-based crowdfunding. In the former, small firms could pre-sell a product or service to start a business whereas in the latter, backers buys certain amount of shares of a firm in exchange of money; as for reward-based crowdfunding, project creators would set deadline. Anyone, interested can pledge on the projects. Projects must reach its targeted amount in order. Once the projects ended with enough funds, projects creators would have to make sure that they fulfil their promises by the intended timeline and delivery their products or services. To raise capital, you require funds from investors. You have to present those investors with high-return projects. By displaying high-level potentials of the projects, investors would be more attracted to put their money into those projects. After certain amount of time in a year’s time, rewards of the investment will be shared with investors; this makes investors happy and they may continue to invest further.
If returns do not meet the intended level, this could reduce the willingness of investors to invest their money into the funds. Hence, the amounts of financial incentives are weighted determinants to ensure the funding remains at a desirable level. Withdrawal of funding, or defunding, occurs when funding given to an organisation ceases in relation to Governmental funding. Foundation Investment Crowdfunding Peer-to-peer lending Research funding Seed money Micro finance Mutual fund Trust Fund Equity fund
Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people via the Internet. Crowdfunding is a form of alternative finance. In 2015, over US$34 billion was raised worldwide by crowdfunding. Although similar concepts can be executed through mail-order subscriptions, benefit events, other methods, the term crowdfunding refers to Internet-mediated registries; this modern crowdfunding model is based on three types of actors: the project initiator who proposes the idea or project to be funded, individuals or groups who support the idea, a moderating organization that brings the parties together to launch the idea. Crowdfunding has been used to fund a wide range of for-profit, entrepreneurial ventures such as artistic and creative projects, medical expenses and community-oriented social entrepreneurship projects, it has been criticised for funding quackery costly and fraudulent cancer treatments. Crowdfunding has a long history with several roots.
Books have been crowdfunded for centuries: authors and publishers would advertise book projects in praenumeration or subscription schemes. The book would be written and published if enough subscribers signaled their readiness to buy the book once it was out; the subscription business model is not crowdfunding, since the actual flow of money only begins with the arrival of the product. The list of subscribers has, the power to create the necessary confidence among investors, needed to risk the publication. War bonds are theoretically a form of crowdfunding military conflicts. London's mercantile community saved the Bank of England in the 1730s when customers demanded their pounds to be converted into gold - they supported the currency until confidence in the pound was restored, thus crowdfunded their own money. A clearer case of modern crowdfunding is Auguste Comte's scheme to issue notes for the public support of his further work as a philosopher; the "Première Circulaire Annuelle adressée par l'auteur du Système de Philosophie Positive" was published on 14 March 1850, several of these notes and with sums have survived.
The cooperative movement of the 19th and 20th centuries is a broader precursor. It generated collective groups, such as community or interest-based groups, pooling subscribed funds to develop new concepts and means of distribution and production in rural areas of Western Europe and North America. In 1885, when government sources failed to provide funding to build a monumental base for the Statue of Liberty, a newspaper-led campaign attracted small donations from 160,000 donors. Crowdfunding on the internet first gained popular and mainstream use in the arts and music communities; the first noteworthy instance of online crowdfunding in the music industry was in 1997, when fans underwrote an entire U. S. tour for the British rock band Marillion, raising US$60,000 in donations by means of a fan-based Internet campaign. They subsequently used this method to fund their studio albums. In the film industry, independent writer/director Mark Tapio Kines designed a website in 1997 for his then-unfinished first feature film Foreign Correspondents.
By early 1999, he had raised more than US$125,000 on the Internet from at least 25 fans, providing him with the funds to complete his film. In 2002, the "Free Blender" campaign was an early software crowdfunding precursor; the campaign aimed for open-sourcing the Blender 3D computer graphics software by collecting €100,000 from the community while offering additional benefits for donating members. The first company to engage in this business model was the U. S. website ArtistShare. As the model matured, more crowdfunding sites started to appear on the web such as Kiva, IndieGoGo, Kickstarter, GoFundMe, YouCaring; the phenomenon of crowdfunding is older than the term "crowdfunding". According to wordspy.com, the earliest recorded use of the word was in August 2006. The Crowdfunding Centre's May 2014 report identified two primary types of crowdfunding: Rewards crowdfunding: entrepreneurs presell a product or service to launch a business concept without incurring debt or sacrificing equity/shares.
Equity crowdfunding: the backer receives shares of a company in its early stages, in exchange for the money pledged. Reward-based crowdfunding has been used for a wide range of purposes, including motion picture promotion, free software development, inventions development, scientific research, civic projects. Many characteristics of rewards-based crowdfunding called non-equity crowdfunding, have been identified by research studies. In rewards-based crowdfunding, funding does not rely on location; the distance between creators and investors on Sellaband was about 3,000 miles when the platform introduced royalty sharing. The funding for these projects is distributed unevenly, with a few projects accounting for the majority of overall funding. Additionally, funding increases as a project nears its goal, encouraging what is called "herding behavior". Research shows that friends and family account for a large, or majority, portion of early fundraising; this capital may encourage subsequent funders to invest in the project.
While funding does not depend on location, observation shows that funding is tied to the locations of traditional financing options. In reward-based crowdfunding, funders are too hopeful about project returns and must revise expectations when returns are not met. Equity crowdfunding is the collective effort of individuals to support efforts initiated by other people or organizations through the provision of finance in the form of equity. In the United States, legislation, m
A lottery is a form of gambling that involves the drawing of numbers at random for a prize. Lotteries are outlawed by some governments, while others endorse it to the extent of organizing a national or state lottery, it is common to find some degree of regulation of lottery by governments. Though lotteries were common in the United States and some other countries during the 19th century, by the beginning of the 20th century, most forms of gambling, including lotteries and sweepstakes, were illegal in the U. S. and most of Europe as well as many other countries. This remained so until well after World War II. In the 1960s casinos and lotteries began to re-appear throughout the world as a means for governments to raise revenue without raising taxes. Lotteries come in many formats. For example, the prize can be a fixed amount of cash or goods. In this format there is risk to the organizer. More the prize fund will be a fixed percentage of the receipts. A popular form of this is the "50–50" draw where the organizers promise that the prize will be 50% of the revenue.
Many recent lotteries allow purchasers to select the numbers on the lottery ticket, resulting in the possibility of multiple winners. The first recorded signs of a lottery are keno slips from the Chinese Han Dynasty between 205 and 187 BC; these lotteries are believed to have helped to finance major government projects like the Great Wall of China. From the Chinese "The Book of Songs" comes a reference to a game of chance as "the drawing of wood", which in context appears to describe the drawing of lots; the first known European lotteries were held during the Roman Empire as an amusement at dinner parties. Each guest would receive a ticket, prizes would consist of fancy items such as dinnerware; every ticket holder would be assured of winning something. This type of lottery, was no more than the distribution of gifts by wealthy noblemen during the Saturnalian revelries; the earliest records of a lottery offering tickets for sale is the lottery organized by Roman Emperor Augustus Caesar. The funds were for repairs in the City of Rome, the winners were given prizes in the form of articles of unequal value.
The first recorded lotteries to offer tickets for sale with prizes in the form of money were held in the Low Countries in the 15th century. Various towns held public lotteries to raise money for town fortifications, to help the poor; the town records of Ghent and Bruges indicate that lotteries may be older. A record dated 9 May 1445 at L'Ecluse refers to raising funds to build walls and town fortifications, with a lottery of 4,304 tickets and total prize money of 1737 florins. In the 17th century it was quite usual in the Netherlands to organize lotteries to collect money for the poor or in order to raise funds for all kinds of public usages; the lotteries proved popular and were hailed as a painless form of taxation. The Dutch state-owned Staatsloterij is the oldest running lottery; the English word lottery is derived from the Dutch noun "lot" meaning "fate". The first recorded Italian lottery was held on 9 January 1449 in Milan organized by the Golden Ambrosian Republic to finance the war against the Republic of Venice.
However, it was in Genoa that Lotto became popular. People used to bet on the name of Great Council members, who were drawn by chance, five out of ninety candidates every six months; this kind of gambling was called Semenaiu. When people wanted to bet more than twice a year, they began to substitute the candidates names with numbers and modern lotto was born, to which both modern legal lotteries and the illegal Numbers game can trace their ancestry. King Francis I of France discovered the lotteries during his campaigns in Italy and decided to organize such a lottery in his kingdom to help the state finances; the first French lottery, the Loterie Royale, was held in 1539 and was authorized with the edict of Châteaurenard. This attempt was a fiasco, since the tickets were costly and the social classes which could afford them opposed the project. During the two following centuries lotteries in France were forbidden or, in some cases, tolerated. Although the English first experimented with raffles and similar games of chance, the first recorded official lottery was chartered by Queen Elizabeth I, in the year 1566, was drawn in 1569.
This lottery was designed to raise money for the "reparation of the havens and strength of the Realme, towardes such other publique good workes". Each ticket holder won a prize, the total value of the prizes equalled the money raised. Prizes were in the form of other valuable commodities; the lottery was promoted by scrolls posted throughout the country showing sketches of the prizes. Thus, the lottery money received was an interest free loan to the government during the three years that the tickets were sold. In years, the government sold the lottery ticket rights to brokers, who in turn hired agents and runners to sell them; these brokers became the modern day stockbrokers for various commercial ventures. Most people could not afford the entire cost of a lottery ticket, so the brokers would sell shares in a ticket. Many private lotteries were held, including raising money for The Virginia Company of London to support its settlement in America at Jamestown; the English State Lottery ran from 1694 until 1826.
Thus, the English lotteries ran for over 250 years, until the government, under constant pressure from the opposition in p
The stock of a corporation is all of the shares into which ownership of the corporation is divided. In American English, the shares are known as "stocks." A single share of the stock represents fractional ownership of the corporation in proportion to the total number of shares. This entitles the stockholder to that fraction of the company's earnings, proceeds from liquidation of assets, or voting power dividing these up in proportion to the amount of money each stockholder has invested. Not all stock is equal, as certain classes of stock may be issued for example without voting rights, with enhanced voting rights, or with a certain priority to receive profits or liquidation proceeds before or after other classes of shareholders. Stock can be bought and sold or on stock exchanges, such transactions are heavily regulated by governments to prevent fraud, protect investors, benefit the larger economy; as new shares are issued by a company, the ownership and rights of existing shareholders are diluted in return for cash to sustain or grow the business.
Companies can buy back stock, which lets investors recoup the initial investment plus capital gains from subsequent rises in stock price. Stock options, issued by many companies as part of employee compensation, do not represent ownership, but represent the right to buy ownership at a future time at a specified price; this would represent a windfall to the employees if the option is exercised when the market price is higher than the promised price, since if they sold the stock they would keep the difference. A person who owns a specific percentage of the share has the ownership of the corporation proportional to his share; the shares together form stock. The stock of a corporation is partitioned into shares, the total of which are stated at the time of business formation. Additional shares may subsequently be authorized by the existing shareholders and issued by the company. In some jurisdictions, each share of stock has a certain declared par value, a nominal accounting value used to represent the equity on the balance sheet of the corporation.
In other jurisdictions, shares of stock may be issued without associated par value. Shares represent a fraction of ownership in a business. A business may declare different types of shares, each having distinctive ownership rules, privileges, or share values. Ownership of shares may be documented by issuance of a stock certificate. A stock certificate is a legal document that specifies the number of shares owned by the shareholder, other specifics of the shares, such as the par value, if any, or the class of the shares. In the United Kingdom, Republic of Ireland, South Africa, Australia, stock can refer to different financial instruments such as government bonds or, less to all kinds of marketable securities. Stock takes the form of shares of either common stock or preferred stock; as a unit of ownership, common stock carries voting rights that can be exercised in corporate decisions. Preferred stock differs from common stock in that it does not carry voting rights but is entitled to receive a certain level of dividend payments before any dividends can be issued to other shareholders.
Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares any time after a predetermined date. Shares of such stock are called "convertible preferred shares". New equity issue may have specific legal clauses attached that differentiate them from previous issues of the issuer; some shares of common stock may be issued without the typical voting rights, for instance, or some shares may have special rights unique to them and issued only to certain parties. New issues that have not been registered with a securities governing body may be restricted from resale for certain periods of time. Preferred stock may be hybrid by having the qualities of bonds of fixed returns and common stock voting rights, they have preference in the payment of dividends over common stock and have been given preference at the time of liquidation over common stock. They have other features of accumulation in dividend. In addition, preferred stock comes with a letter designation at the end of the security.
B, whereas Class "A" shares of ORION DHC, Inc will sell under ticker OODHA until the company drops the "A" creating ticker OODH for its "Common" shares only designation. This extra letter does not mean that any exclusive rights exist for the shareholders but it does let investors know that the shares are considered for such, these rights or privileges may change based on the decisions made by the underlying company. "Rule 144 Stock" is an American term given to shares of stock subject to SEC Rule 144: Selling Restricted and Control Securities. Under Rule 144, restricted and controlled securities are acquired in unregistered form. Investors either purchase or take ownership of these securities through private sales from the issuing company or from an affiliate of the issuer. Investors wishing to sell these securities are subject to different rules than those selling traditional common or preferred stock; these individuals will only be allowed to liquidate their securities after meeting the specific conditions set forth by SEC Rule 144.