Now that you understand how markets work, let's explore what you're actually buying and selling - starting with equity securities!
Equity securities represent ownership stakes in companies. When you buy equity, you become a part-owner of that business.
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What's the most familiar type of equity security?
Stocks are the most common equity securities. Each share of stock represents a tiny piece of ownership in a corporation.
If Apple has 16 billion shares outstanding and you own 100 shares, you own 100/16,000,000,000 of the entire company!
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Owning one share makes you a part-owner—true or false?
There are two main types of stock: common stock and preferred stock. Most individual investors buy common stock.
Common stockholders are the "regular" owners who get voting rights and can benefit from company growth through rising stock prices.
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What do you think voting rights allow you to do?
Preferred stockholders are like VIP owners. They typically receive dividends before common stockholders and have priority if the company goes bankrupt.
However, preferred stockholders usually give up voting rights in exchange for these benefits.
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Which would you prefer - voting rights or priority treatment?
Voting rights let common stockholders elect the company's board of directors and vote on major company decisions like mergers.
Most individual investors don't attend shareholder meetings, but your votes still matter for important company decisions!
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Have you ever received voting materials from a company you own stock in?
