Exam Weight: ~3 questions (2.3% of exam)
Prerequisite: Equity Securities (types of equity, preferred stock types, ADRs)
This unit covers the rights, restrictions, and features of equity ownership. Understanding shareholder rights, restricted stock rules, dividend mechanics, and employee stock options is essential for the exam.
What You'll Learn
- Shareholder rights including voting methods, antidilution (preemptive) rights, and liquidation preferences
- Restricted stock, control securities, and the SEC's restricted-stock resale rules
- Cash dividends, stock dividends, and key dividend dates
- Employee stock options: ISOs vs NQSOs and their tax treatment
- Synthesis: Putting equity characteristics together
The Big Picture
The previous unit taught you what types of equity exist: common stock, preferred stock, and American Depositary Receipts (ADRs). This unit teaches you the rights and rules that come with equity ownership: how shareholders vote, when restricted shares can be sold, how dividends work, and how employee stock options are taxed.