Introduction

Welcome to Types of Equity Securities - the unit that breaks down the two main forms of stock ownership and what makes each one unique for investors.

Exam Weight: Part of 17 questions

What You'll Learn

In this unit, you'll cover:

• Common Stock: Ownership rights, voting power, dividends, liquidation priority, and how to access foreign markets through ADRs
• Preferred Stock: Fixed dividends, priority over common, convertible features, and the key gotcha that preferred is equity (not debt) despite behaving like a bond

Why This Matters

The Series 66 assumes you already know basic securities from the Series 7. This unit focuses on the characteristics and distinctions that show up on exam questions, particularly the hybrid nature of preferred stock and how convertible preferred is valued. Understanding the rights, risks, and tax treatment of each equity type helps you make suitable client recommendations.

Let's start with the foundation of equity ownership: common stock.