Glossary: M04 — Overview of Equity Securities
| Term | Definition |
|---|---|
| American Depositary Receipt (ADR) | A negotiable certificate representing shares of a foreign company, traded on a US exchange |
| Book Value | The net asset value of a company as reported on its balance sheet (assets minus liabilities) |
| Book Value per Share (BVPS) | Common shareholders’ equity divided by shares outstanding |
| Callable Common Stock | Common shares that the issuing company can repurchase at a predetermined price |
| Common Stock | Equity securities representing residual ownership in a company, with voting rights |
| Convertible Preferred Stock | Preferred stock that can be converted into common shares at a specified ratio |
| Cumulative Preferred Stock | Preferred stock where unpaid dividends accumulate and must be paid before common dividends |
| Depository Receipt (DR) | A certificate representing ownership of shares in a foreign company |
| Dividend | A distribution of earnings to shareholders, typically in cash or additional shares |
| DuPont Analysis | Decomposition of ROE into profit margin, asset turnover, and financial leverage |
| Global Depository Receipt (GDR) | A depository receipt issued outside the company’s home country and the US |
| Global Registered Share | A common share traded on stock exchanges worldwide in different currencies |
| Growth Stock | A stock expected to grow earnings faster than the market average; typically high P/E |
| Market Capitalization | The total market value of a company’s outstanding shares () |
| Non-Cumulative Preferred Stock | Preferred stock where unpaid dividends do not accumulate |
| Participating Preferred Stock | Preferred stock that shares in profits beyond its fixed dividend rate |
| Preferred Stock | Equity with fixed dividend payments and priority over common stock in liquidation |
| Private Equity | Equity investments in companies not listed on public exchanges |
| Putable Common Stock | Common shares that the holder can sell back to the issuer at a predetermined price |
| Return on Equity (ROE) | Net income divided by average shareholders’ equity; measures profitability |
| Share Repurchase (Buyback) | A company purchasing its own shares from the market, reducing shares outstanding |
| Sponsored DR | A depository receipt where the foreign company is involved in the issuance |
| Unsponsored DR | A depository receipt created without the direct involvement of the foreign company |
| Value Stock | A stock trading at a low price relative to fundamentals (low P/E, P/B); considered undervalued |
| Voting Rights | The right of common shareholders to vote on corporate matters |
Related: M04 Module Page | Equity Formulas