An accelerated share repurchase (ASR) is a strategy used by a company to buy back its own shares quickly by using an investment bank as a go-between.

Intel Initiates $10 Billion Accelerated Share Repurchase Agreements

An accelerated share repurchase (ASR) is an investment strategy where a publicly-traded company expeditiously buys back large blocks of its outstanding shares from the market by relying on a go-between investment bank to facilitate the deal. But if the company instead relied on an accelerated share repurchase program to gobble up a bundle of stocks all at once, by buying those shares from an investment bank intermediary, the company and the bank could dictate the terms in a way that mutually benefits both parties. An accelerated share repurchase (ASR) is an investment strategy where a publicly-traded company expeditiously buys back large blocks of its outstanding shares from the market by relying on a go-between investment bank to facilitate the deal. An accelerated share repurchase (ASR) is when a publicly-traded company buys back large blocks of its outstanding shares using an investment bank to facilitate the deal. Companies typically engage in accelerated share repurchase (ASR) programs when they believe their stock shares are undervalued because this process tends to ultimately inflate the stock's value.

Accelerated Share Repurchase (ASR)

When an investor increases a position in an asset heading in the opposite direction than what the investor desires it is called adding to a loser.

Adding to a loser is a term that refers to an instance in which a trader or investor increases their position in an asset when its price is moving in the opposite direction of their original purchase. Adding to a loser is a term that refers to an instance in which a trader or investor increases their position in an asset when its price is moving in the opposite direction of their original purchase. If a stock declines initially after purchase, an investor may feel a compulsion to buy more at the lower price, feeling regret for having bought at a higher price. The most common one is an emotional response, in which an investor might add to a losing position instead of closing it because they get emotionally attached to the asset and have a hard time accepting that it was a bad investment. Adding to a losing trade, at a better price than the original entry, will bring down the average entry price.

Adding to a Loser  and Example

The adjusted closing price amends a stock's closing price to reflect that stock's value after accounting for any corporate actions.

The adjusted closing price amends a stock's closing price to reflect that stock's value after accounting for any corporate actions. The adjusted closing price amends a stock's closing price to reflect that stock's value after accounting for any corporate actions. The adjusted closing price amends a stock's closing price to reflect that stock's value after accounting for any corporate actions. The adjusted closing price factors in anything that might affect the stock price after the market closes. The adjusted closing price can obscure the impact of key nominal prices and stock splits on prices in the short term.

Adjusted Closing Price

Aftermarket performance is the variation in the price level of a newly issued stock during a period after its initial public offering (IPO).

Aftermarket performance is the variation in price level of a newly issued stock during a period after its initial public offering (IPO). Aftermarket performance is how a stock performs during a period of time after its initial public offering (IPO).
IPO stocks are typically highly volatile in their first months of trading.
The price of the IPO, buyer enthusiasm or pessimism, and the initial earnings releases all play a role in aftermarket performance.
An aftermarket report helps investors and companies analyze a stock's performance by summarizing key metrics such as the stock's price over previous trading sessions, initial earnings after the IPO, and company-specific news that might impact the stock in the future.
After an IPO, the price of the stock will fluctuate as investors buy and sell the shares. An aftermarket report summarizes the aftermarket performance of a stock, often listing key metrics that help analysts and investors evaluate the stock during its first days and months of trading. Beyond that, an aftermarket report might also include a summary of analyst coverage, information on the stock's earnings, and company-specific or industry-specific news that might impact the stock's price going forward. [Peloton (PTON) after-market performance chart](data:image/gif;charset=utf-8;base64,R0lGODlhCwAGAPEAANMvL5LSzPepp////ywAAAAACwAGAEEIGQAHCBxIcACAgggTKlyoUMCAABAhPgwgICAAOw==)
TradingView
The close price on Oct. 25 (Oct. 26 was a weekend) was $22.40, so the one-month aftermarket performance of the stock was -22.8% ((22.40 - 29) / 29).

Aftermarket Performance  and Example

An aged fail is a transaction between two broker-dealers that has not been settled within 30 days of the trade date. 

Amendment to Securities Transaction Settlement Cycle

240.15c3–1 Net Capital Requirements for Brokers or Dealers

An aged fail is a transaction between two broker-dealers that has not been settled within 30 days of the trade date. In financial markets, if a seller does not deliver stock or a buyer does not pay owed funds by the settlement date—which in the US is the trade date plus two days (T+2)—then the transaction is said to fail. Dealers have to maintain additional capital for fails-to-deliver five or more business days old and for fails-to-receive more than thirty calendar days old, under SEC Rule 15c3-1, often called the uniform net capital rule. Fails turn into aged fails when the trade still has not settled 30 days after the trade date. If the original trade fails, the buyer doesn't have those securities to pledge to the next transaction, so that transaction also fails.

Aged Fail  and Example

"All-holders rule” refers to a regulation stating that any tender offer must be made to all shareholders within a particular class of shares.

Commission Guidance and Revisions To The Cross-Border Tender Offer, Exchange Offer, Rights Offerings, and Business Combination Rules

Amendments To The Tender Offer Best-Price Rules

In finance, the term “all-holders rule” refers to a regulationstipulating that any tender offer must be made available to all shareholders within the particular class of shares being solicited for purchase. ”
Under the best-price rule, the price paid to all security holders in a tender transaction must be the “highest” or “best” price available to any of the security holders involved in that transaction.﻿﻿ Taken together, these two rules prevent any shareholders from being ignored in the course of the tender offer, while also preventing certain shareholders from being offered a less favorable price than others. One such provision is the all-holders rule, which requires that any tender offer must be extended to all of the holders of the particular class of shares to which the tender offer refers.
Derived from Rule 14d-10 of the Securities Exchange Act of 1934, the all-holders rule is one of many provisions designed to protect the rights of shareholders. In finance, the term “all-holders rule” refers to a regulationstipulating that any tender offer must be made available to all shareholders within the particular class of shares being solicited for purchase. The all-holders rule is applied in combination with a second provision, known as the best-price rule.

All-Holders Rule

An allotment commonly refers to the allocation of shares granted to a participating underwriting firm during an initial public offering (IPO).

An allotment commonly refers to the allocation of shares granted to a participating underwriting firm during an initial public offering (IPO). In the case of a takeover, new shares can be allotted to existing shareholders of the acquired company, efficiently exchanging their shares for equity in the acquiring company. The number one reason a company issues new shares for allotment is to raise money to finance business operations. The number one reason a company issues new shares for allotment is to raise money to finance business operations. There are several types of allotment that arise when new shares are issued and allocated to either new or existing shareholders.

Allotment

An alphabet stock is an equity share that is tied to a specific subsidiary of a corporation. 

An alphabet stock refers to a separate class of common stock that is tied to a specific subsidiary of a corporation. It is called an alphabet stock because the classification system used to identify each class of common stock uses letters to distinguish it from the parent company's stock. Companies with complex capital structures and several subsidiaries and divisions may have a combination of several different varieties of common stock classes, with each share class carrying different voting rights and dividend rates. However, this new asset class of stock may have limited voting rights, allowing insiders and management to maintain control of the firm.
Alphabet shares may be indicative of a complex capital structure. When alphabet stock is issued, typical nomenclature is to see a period and letter behind the existing stock symbol, indicating a separate share class.

Alphabet Stock

The Amazon effect refers to the ongoing evolution and disruption of the offline retail market resulting from an increase in e-commerce activities

E-Commerce Retail Sales as a Percent of Total Sales

Deep Dive: The US Retail Revolution Solution

Exploring the role of Amazon effect on customer expectations: An analysis of user-generated content in consumer electronics retailing

The Amazon effect refers to the impact created by the online, eCommerce, or digital marketplace on the traditional brick and mortar business model that is the result of the change in shopping patterns, customer expectations, and the industry's competitive landscape. Store operators benefit by receiving a cut for their service, by supplying a few of the ordered products from their own stores, and by an increase in foot traffic in their stores.
Customers buying online don't get to feel, see, hear, smell, or taste a product before they buy it online (unless they have already used the product or they scope it out at a physical retail location before buying it online). The use of big data and artificial intelligence (AI)\-powered systems that better monitor a customer’s shopping pattern and behavior via online portals are a win-win—the consumers receive customized offers and promotions, and shopping portals benefit by pitching products with a high likelihood of being purchased. An increasing number of shoppers are heading for their screens instead of for stores; online sales in the US increased 13.6% in 2020, compared to a rise of 10.7% the prior year, according to the US Census Bureau's Department of Commerce.
Amazon.com Inc. (AMZN), which debuted in 1994, has maintained its lead in global online selling and has become the poster child for this change, giving the Amazon effect its name. The Amazon effect refers to the impact created by the online, eCommerce, or digital marketplace on the traditional brick and mortar business model that is the result of the change in shopping patterns, customer expectations, and the industry's competitive landscape.

Amazon Effect

An analyst expectation is a report indicating how a particular company's stock will perform in the coming quarter. 

An analyst expectation is a report issued by an individual analyst, investment bank or financial services company indicating how a particular company's stock will perform in the coming quarter. An analyst expectation is a report issued by an individual analyst, investment bank or financial services company indicating how a particular company's stock will perform in the coming quarter. Usually, multiple analysts will follow the same company and issue their own expectations of that company’s performance in the coming quarter. If a stock performs better than what analysts expected, it is considered to have _beaten expectations_ or delivered stronger-than-expected results; the stock may also have been said to have _beaten the street_. However, sometimes companies might try to use high expectations to drive a stock price up by giving investors the impression that analysts think well of the company.

Analyst Expectation

Anti-dilution provisions are clauses built into convertible preferred stocks to help shield investors from their investment potentially losing value.

Anti-dilution provisions are clauses built into convertible preferred stocks and some options to help shield investors from their investment potentially losing value. The **weighted average*provision uses the following formula to determine new conversion prices:
C2 = C1 x (A + B) / (A + C)
C2 = new conversion price
C1 = old conversion price
A = number of outstanding shares before a new issue
B = total consideration received by the company for the new issue
C = number of new shares issued When the number of shares outstanding increases, each existing stockholder owns a smaller, or diluted, percentage of the company, making each share less valuable.
Sometimes the company receives enough cash in exchange for the shares that the increase in the value of the shares offsets the effects of dilution; but often this is not the case. Anti-dilution provisions can discourage this from happening by tweaking the conversion price between convertible securities, such as corporate bonds or preferred shares, and common stocks. Very simply, if the original conversion price was $5 and in a later round the conversion price is $2.50, the investor's original conversion price would adjust to $2.50.

Anti-Dilution Provision

An anticipatory hedge is a futures transaction used to lock in prices on an upcoming purchase or sale. It can be a full or partial hedge.

U.S. Dollar to Canadian Dollar Spot Exchange Rates for 1970 to 2020 from the Bank of England

An anticipatory hedge is a futures position taken in advance of an upcoming buy or sell transaction. For example, if an oil refiner—that needs to buy oil to refine—is expecting the price of oil to rise over the next quarter, they may buy oil futures now when they are cheaper. When they know they will have an upcoming cost next quarter, such as buying oil, they buy oil futures now so they know what their oil cost will be next quarter. If they believe oil is going to decline over the next quarter, they may not buy any futures now, or only a small amount, because they will simply buy their oil as needed in the spot market, at hopefully a cheaper price down the road. A trader at home buying oil futures because they expect the oil price to rise has no interest in actually taking delivery, or delivering, actual oil.

Anticipatory Hedge  and Uses

A back stop provides last-resort support or security in a securities offering for the unsubscribed portion of shares.

A back stop is the act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. By entering into a firm-commitment underwriting agreement, the associated organization has claimed full responsibility for the quantity of shares specified if they initially go unsold, and promises to provide the associated capital in exchange for the available shares. When a company is trying to raise capital through an issuance —and wants to guarantee the amount received through the issue—it may get a back stop from an underwriter or a major shareholder, such as an investment bank, to buy any of its unsubscribed shares. While not an actual insurance plan, a company can guarantee that a certain amount of its offering will be purchased by particular organizations, usually investment banking firms, if the open market does not produce enough investors and a portion of the offering goes unsold. If the underwriting organization takes possession of any shares, as specified in the agreement, the shares belong to the organization to manage as it sees fit.

Back Stop

"Baked in the cake" refers to projections, expectations, and other news items that are already reflected in a security’s price.

As a phrase, "baked in the cake" is used to indicate that some material information, such as unverified news reports or earnings projection, has already been taken into account and included in a security's market price. Once a critical number of investors have traded on an earnings estimate, the news will be considered baked in the cake, meaning the news will have already influenced the stock’s market price. For example, if an investor is told material, non-public information by an employee of a company, trading that company’s shares may lead to an investigation by the Securities and Exchange Commission (SEC), as acting on non-public information to make a profit from investing in that company may be illegal insider trading. In addition to concerns about the source of information found online, investors need to consider that information gleaned from online sources may already be baked in the cake. Investors who try to profit from breaking news must answer a difficult question: How many other investors have already acted on the news, before, at, and after its release?

Baked in the Cake

A barometer stock is considered to be an indicator of the performance of its particular sector or industry, or the market as a whole.

A barometer stock—also called a bellwether stock—is a security whose performance is considered to be an indicator of the performance of its particular sector or industry, or the market as a whole. Alphabet (GOOG), the parent company of Google, is considered a barometer of tech-sector performance by some analysts.
Barometer stocks change over time, as deteriorating performance, market share, earnings, or the stock's sector may prevent the stock from providing useful insight about the economy or the direction of the market indexes or sector. A barometer stock—also called a bellwether stock—is a security whose performance is considered to be an indicator of the performance of its particular sector or industry, or the market as a whole. Barometer stocks are usually large-cap stocks—shares that trade for corporations with a market capitalization of $10 billion or more—or respected blue-chip stocks. Many different types of securities can be classified as barometers; however, in the U.S., the shipping and rail stocks are often used as indicators for the U.S. economy—as such, they are considered barometer stocks.

Barometer Stock

The basic materials sector is an industry category of businesses engaged in the discovery, development, and processing of raw materials.

The basic materials sector is an industry category made up of businesses engaged in the discovery, development, and processing of raw materials. The basic materials sector is made up of companies involved in the discovery, development, and processing of raw materials, from gold and oil to timber.
The raw materials they finish are sold for use in nearly all other industry sectors.
The sector is particularly sensitive to the ups and downs of the economy. The basic materials sector is made up of companies involved in the discovery, development, and processing of raw materials.
Most industries rely on companies in this sector for the raw materials they need to manufacture their goods. Companies in the basic materials sector are involved in the physical acquisition, development, and initial processing of the many products commonly referred to as raw materials. The basic materials sector is an industry category made up of businesses engaged in the discovery, development, and processing of raw materials.

Basic Materials Sector

A Bear Market Rally is a short-lived upward trend in prices during a longer-term bear market. 

A bear Market Rally refers to a sharp, short-term price increase in a stock or market amid a longer-term bear market period. Although there are no specific benchmarks for classifying a bear market rally, the term is typically used to describe an increase of 5 percent or more during a bear market, followed by a subsequent, continued downward drop. A bear Market Rally refers to a sharp, short-term price increase in a stock or market amid a longer-term bear market period. While speculating on bear market rallies tends to be a high-risk investment strategy, it can be attractive to investors looking to sell assets they may have bought at the bottom of the bear market as the rally peaks. Notably, the Dow Jones experienced a three-month bear market rally following the Stock Market Crash of 1929, although the bear market continued to decline until bottoming out in 1932.

Bear Market Rally

A bearer share is an equity security that is entirely owned by the holder of the physical stock certificate, as opposed to registered stock ownership.

Announcement of the conversion of the no-par value bearer shares to no-par value registered shares

Small Business, Enterprise and Employment Act 2015: Abolition of share warrants to bearer

Federal Council brings Federal Act on Implementation of Recommendations of Global Forum into force

Table of Contents
What Is a Bearer Share?
How a Bearer Share Works
Benefits of Using Bearer Shares
Disadvantages of Bearer Shares
Bearer Shares Example Germany-based pharmaceutical giant Bayer AG, for example, started to convert all its bearer shares to registered shares in 2009,﻿﻿ and in 2015, the United Kingdom abolished the issuance of bearer shares under the provisions of the Small Business, Enterprise and Employment Act 2015. The ownership of bearer shares often coincides with an increased cost incurred from hiring professional representation and advisors to maintain the anonymity that bearer shares provide. Bearer shares are often international securities, common in Europe and South America — although the use of bearer shares in these nations has dwindled as governments crackdown on anonymity-related illegal activity. While bearer shares were often used internationally in Europe, South America, and other regions, many large corporations no longer use them and have transitioned to using registered shares.

Bearer Share

The bond equity earnings yield ratio (BEER) is a measure that enables investors to use the bond yield to estimate the direction of the stock market.

Stock Valuation Models - Topical Study #56

The fed model: The bad, the worse, and the ugly

Table of Contents
Bond Equity Earnings Yield Ratio The formula for BEER:
**BEER = Bond Yield / Earnings Yield**
BEER is calculated by dividing the yield of a government bond by the current earnings yield of a stock benchmark in the same market. The bond equity earnings yield ratio (BEER) is a metric used to evaluate the relationship between bond yields and earnings yields in the stock market. A BEER ratio can be calculated using any benchmark bond yield and any benchmark stock market's earnings yield. The bond equity earnings yield ratio (BEER) is a way investors can use bond yields to estimate the direction of the stock market.

Bond Equity Earnings Yield Ratio (BEER)

Big Blue is a long-standing nickname for the IBM corporation, a global technology company based in the US.

The Making of International Business Machines

As the Turing Award turns 50, honoring recipient Ted Codd

Trust and responsibility. Earned and practiced daily

Big Blue is a nickname used since the 1980s for the International Business Machines Corporation (IBM).﻿﻿ The moniker may have arisen from the blue tint of its early computer displays, or from the deep blue color of its corporate logo. The first known print reference to the Big Blue nickname appeared in the June 8, 1981, edition of Businessweek magazine, and is attributed to an anonymous IBM enthusiast.
_“No company in the computer business inspires the loyalty that IBM does, and the company has accomplished this with its almost legendary customer service and support … Other speculators have also associated the Big Blue nickname with the company’s logo and its one-time dress code, as well as IBM’s historical association with blue-chip stocks. , it is not uncommon for customers to refuse to buy equipment not made by IBM, even though it is often cheaper. ‘I don't want to be saying I should have stuck with the “Big Blue,”’ says one IBM loyalist. IBM holds the most U.S. patents of any business and, to date, IBM employees have been awarded many notable titles, including five Nobel Prizes and six Turing Awards.

Big Blue  and History

Companies can issue blank check preferred stock to raise capital and defend against hostile takeover bids.

Blank check preferred stock is a method companies use to simplify the process of creating new classes of preferred stock and to raise additional funds from sophisticated investors without obtaining separate shareholder approval. This kind of stock can also be created by a public company as a takeover defense in the event of a hostile bid for the company.
Blank check preferred stock refers to shares of a class of a firm's preferred stock authorized by its board of directors, but without further stockholder action. To do issue blank check preferred stock, a company must amend its articles of incorporation to create a new class of unissued shares of preferred stock whose terms and conditions may be expressly determined by the company's board of directors. If a company wants to issue blank check preferred stock, it must include in its articles of incorporation the maximum number of shares of preferred stock that will be authorized and issued. Blank check preferred stock is a method companies use to simplify the process of creating new classes of preferred stock and to raise additional funds from sophisticated investors without obtaining separate shareholder approval.

Blank Check Preferred Stock

A blockbuster drug is an extremely popular drug that generates annual sales of at least $1 billion for the company that sells it.

A blockbuster drug is an extremely popular drug that generates annual sales of at least $1 billion for the company that sells it. When a drug's patent expires, the market is flooded with generic drugs, negatively impacting sales of the blockbuster drug. When a pharmaceutical company creates a drug that works successfully and is approved by the Food and Drug Administration (FDA), they can sell the drug at a high price to recoup the R&D expenses, as well as making a profit. Some of the biggest blockbuster drugs of all time, with lifetime sales of over $100 billion as of 2018, are as follows:
**Company:** Pfizer
**Treats:** High cholesterol
**Lifetime sales:** $164 billion
Warner-Lambert originally developed Lipitor and it was approved in the U.S. in 1997. A blockbuster drug is an extremely popular drug that generates annual sales of at least $1 billion for the company that sells it.

Blockbuster Drug

A blue-chip index seeks to track the performance of financially stable, well-established companies that provide investors with consistent returns.

SPDR® Dow Jones® Industrial Average ETF Trust

A blue-chip index is an index that tracks the shares of well-known and financially stable publicly traded companies known as blue chips. There are many well-known ETFs on the market, but only a handful of notable blue-chip ETFs following blue-chip indices, including the SPDR S&P 500 and iShares Core S&P 500 ETFs, which both track the S&P 500. Investors can invest in a blue-chip index and gain exposure to a variety of stable stocks by purchasing shares of a blue-chip-focused exchange-traded fund (ETF) or index fund. A blue-chip index is an index that tracks the shares of well-known and financially stable publicly traded companies known as blue chips. Besides the DJIA and S&P 500, other examples of blue-chip indexes include the New Europe Blue Chip Index (NTX), which tracks 30 of the top stocks traded in central, eastern, and southeastern Europe, and the DAX Index, which tracks the top 30 companies on the Frankfurt Stock Exchange.

Blue-Chip Index

The broad-based weighted average is an anti-dilution provision that can protect the ownership of early preferred shareholders in a company.

The broad-based weighted average is an anti-dilution provision used for the benefit of existing preferred shareholders when additional offerings are made by the corporation. The formula for a broad-based weighted average is:
(Common outstanding previously issued + common issuable for the amount raised at the prior conversion price) ÷ (Common outstanding previously issued + common issued in the new deal).
For the broad-based weighted average, the representation of common outstanding includes all common and preferred shares on an as-converted basis, as well as all outstanding convertible securities, such as options and warrants.
A narrow-based weighted average is another approach to protect shareholders from share dilution. At the time of the secondary offering, the company will adjust the value of the preferred shares to a new weighted average price using the broad-based weighted average calculation. With the broad-based weighted average formula, holders of preferred stock will receive fewer additional shares upon conversion than what would be issued using the narrow-based weighted average formula. When a company issues new shares, the value of the preferred shares will be adjusted to a new weighted average price using a calculation intended to protect investors from the dangers of share dilution.

Broad-Based Weighted Average

A burst basket refers to a particular type of stock transaction that involves the sale or purchase of a basket of stocks. 

An institution with low trading costs, large amounts of capital to deploy, and algorithmic or automated trading capabilities, may create its own basket orders, buying or selling dozens or even hundreds of different stocks all at the same time. Compare this to an ETF, where an investor can buy a single share of the SPDR S&P 500 ETF, for example, and own a piece of all the companies in the S&P 500 index. A burst basket refers to a transaction that executes the sale or purchase of a group of stocks, known as a basket. Buying 500 (actually 505, subject to change) stocks to get a portfolio representative of the S&P 500 would incur significant costs, and even buying one share of each company may cost more than the investor has to invest.

Burst Basket  and Uses

A buy-in is when an investor is forced to repurchase shares because the seller did not deliver securities in a timely fashion or did not deliver them at all.

A buy-in in the financial markets is an occurrence in which an investor is forced to repurchase shares of security because the seller of the original shares did not deliver the securities in a timely fashion or did not deliver them at all. A buy-in in the financial markets is an occurrence in which an investor is forced to repurchase shares of security because the seller of the original shares did not deliver the securities in a timely fashion or did not deliver them at all. The difference between a traditional and forced buy-in is that in a forced buy-in, shares are repurchased to cover an open short position. In a forced buy-in, shares are repurchased to cover an open short position, as opposed to a traditional buy-in. A buy-in is a reference to the repurchasing of shares by an investor because the original seller failed to deliver the shares as promised.

Buy-In

CANSLIM, created by William J. O'Neil, is a system for selecting growth stocks using a combination of fundamental and technical analysis techniques.

CANSLIM, created by _Investor's Business Daily_ William J. O'Neil, is a system for selecting growth stocks using a combination of fundamental and technical analysis techniques. These stocks cannot be bought and simply held as much of the value is being priced in for future growth, meaning any slowing in the growth trajectory, or the market as a whole, may result in the stock being punished. CANSLIM, created by _Investor's Business Daily_ William J. O'Neil, is a system for selecting growth stocks using a combination of fundamental and technical analysis techniques. CANSLIM, created by _Investor's Business Daily_ William J. O'Neil, is a system for selecting growth stocks using a combination of fundamental and technical analysis techniques. CANSLIM is a bullish strategy for fast markets, with the goal being to get into high-growth stocks before the institutional funds are fully invested.

CANSLIM

A capital appreciation fund is a fund that seeks to increase asset value primarily through investments in high growth and value stocks.

Capital Appreciation Fund-Performance-Returns

Capital appreciation, also known as capital gains, refers to the increase of an investment's value. These funds may also be called aggressive growth funds, capital opportunity funds, or capital gain funds. These funds are generally more moderate in their investment holdings than aggressive growth stock funds, investing for both long- and short-term gains with growth and value. Capital appreciation funds may generally have higher risk characteristics than passive index investments and standard value stock funds. A capital appreciation fund is a fund that attempts to increase asset value primarily through investments in high-growth and value stocks.

Capital Appreciation Fund

Capital surplus is equity which cannot otherwise be classified as capital stock or retained earnings.

Capital surplus, or share premium, most commonly refers to the surplus resulting after common stock is sold for more than its par value. Retained earnings are the remaining profits after dividends are paid to shareholders.
Five ways capital surplus can be created include:
1.  From stock issued at a premium to par or stated value (most common)
2.  From the proceeds of stock bought back and then resold
3.  From a reduction of par or stated value or reclassification of capital stock
4.  From donated stock
5.  From the acquisition of companies that have capital surpluses
Although item 1 is the most common, items 2 and 5 should not be overlooked.
During the last decade, public companies have repurchased significant amounts of their common stock through share repurchase programs. Most balance sheets today call capital surplus paid-in surplus or paid-in capital \[in excess of par\].
Capital surplus, or premium, is the excess remaining after common stock is sold for more than its par value.
Capital surplus can also result from the proceeds of stock bought back and then resold and from donated stock. Capital stock can serve as an umbrella term for more specific classifications, such as acquired surplus, additional paid-in-capital, donated surplus, or reevaluation surplus (which could pop up during appraisals).
Although capital surplus and retained earnings are components of stockholders' equity and share similar characteristics, they are fundamentally different. Capital surplus, or share premium, most commonly refers to the surplus resulting after common stock is sold for more than its par value.

Capital Surplus

Cherry picking refers to the act of choosing top securities for investment from research that generally overlooks large amounts of data or disregards broad market metrics.

Cherry picking is the process of choosing investments and trades by following other investors and institutions that are considered reliable and successful over the long term. Cherry picking is also defined as the fraudulent practice of investment managers allocating winning trades to their personal accounts or to favored clients. The fraudulent act of cherry picking involves investment managers selecting specific profitable or unprofitable trades and allocating them in a manner of their choosing. Cherry picking can also be referred to as the fraudulent practice of allocating profitable or unprofitable trades by investment managers and their staff to certain accounts preferentially. Another version of cherry picking involves the fraudulent practice of allocating winning trades to an adviser's personal account or to favored clients–a process banned by the U.S. Securities and Exchange Commission (SEC).

Cherry Picking

Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares.

Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares. In this system, Class A shares are still premium shares with more voting rights, at least compared to Class C shares. Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares. Class A shares refer to a classification of common stock that was traditionally accompanied by more voting rights than Class B shares. Traditional Class A shares are what many people still think of as Class A shares.

Class A Shares

The clientele effect is the theory a company's stock price will change because of investor reaction to a tax, dividend, or other policy change. 

What The Northwestern Mutual Dividend Rate Reduction Means For Policyowners

WINN-DIXIE LOWERS ESTIMATES, CUTS DIVIDEND

The clientele effect explains the movement in a company's stock price according to the demands and goals of its investors. If the company should experience a downturn or elects to decrease its dividend offerings, the dividend investors may sell their stock and reinvest the proceeds in another company paying higher returns. A specific instance of this effect is dividend clientele, a term for a group of stockholders who share the same opinion on how a specific company conducts its dividend policy. The clientele effect assumes that specific investors are preliminarily attracted to different company policies, and that when a company alters one or more such policies they will adjust their stock holdings accordingly. However, if the company stops reinvesting in its growth and instead begins channeling money to dividend payouts, high-growth investors may be inclined to exit their positions and seek other opportunities that better match their needs.

Clientele Effect

Closely held shares of stock are held by a small group whose members have a close relationship with the issuing company.

Closely held shares refers to stocks that are held by a small number of investors in a closely held corporation; a closely held corporation is one where a small number of investors possess most of the corporation's available shares. So there are few opportunities for new investors to buy into the company (or sell out) because trading volume is light; majority shareholders tend to hold onto their shares for the long term because they are part of—or have in interest in—the company.
In order for the firm to qualify as a closely held company, a minimum number of shares must be held by persons outside of the business (such as members of the public).
In many ways, closely held shares behave the same as actively traded shares: They both represent ownership rights in the corporation; and they both come with the same right to vote, receive dividends, and collect a distribution of the company’s net assets if the company is liquidated. Closely held shares refers to stocks that are held by a small number of investors in a closely held corporation; a closely held corporation is one where a small number of investors possess most of the corporation's available shares. Closely held shares are different from the shares of privately held companies, which do not trade shares at all; they are also distinct from publicly traded companies, which are more actively traded each day. Dell decided to take the company private, buying out public shareholders to the tune of $25 billion, in order to refocus the company after a tough year.﻿﻿ As a private company, it wouldn't have to appease public shareholders; instead, it could focus on rebuilding the brand how they (the closely held shareholders) wanted.

Closely Held Shares

The close period is the time between the completion of a listed company's financial results and the public release of those results.

The close period (or closed period) is the time between the completion of a listed company's financial results and the announcing of these results to the public. The close period is typically regarded as the one-month period preceding the release of a company's quarterly results, and the two-month period before the release of its annual results. The close period (or closed period) is the time between the completion of a listed company's financial results and the announcing of these results to the public. Companies may choose to withhold making statements during the close period to prevent the company’s shares from being affected ahead of the release of the expected financial results. The close period is intended to prevent trading in a company's shares by its insiders ahead of the public dissemination of its financial results.

Close Period

A common stock equivalent is a security that can be converted into common stock.

A common stock equivalent is a security—such as stock options, warrants, convertible bonds, preferred bonds, two-class common stock, and contingent shares—that can be converted into common stock. A common stock equivalent is a security—such as stock options, warrants, convertible bonds, preferred bonds, two-class common stock, and contingent shares—that can be converted into common stock. 1:24
Also called common shares or ordinary shares, common stock is what most individuals buy when they invest in a stock. A company must show on its income statement its diluted earnings per share and base earnings per share if there are different forms of stock available, which includes the securities that result from common stock equivalents. A common stock equivalent is a security that can be converted into common stock.

Common Stock Equivalent

Common stock is a security that represents ownership in a corporation. 

Common stock is a security that represents ownership in a corporation. 1:17
With common stock, if a company goes bankrupt, the common stockholders do not receive their money until the creditors, bondholders, and preferred shareholders have received their respective share. It also has preferred stock, such as its Series L (NYSE: WFC-L), and common stock (NYSE: WFC). For example, value stocks are stocks that are lower in price in relation to their fundamentals. Larger US-based stocks are traded on a public exchange, such as the New York Stock Exchange (NYSE) or NASDAQ.

Common Stock

A constituent is a single stock or company that is part of a larger index such as the S&P 500 or Dow Jones Industrial Average. 

A constituent is a company whose shares are part of an index such as the S&P 500 or Dow Jones Industrial Average (DJIA). Below is the current list of Dow Jones constituents:
Dow Jones Industrial Average Components (as of June 2021)
**Company**
**Year Added**
American Express
Caterpillar
Cisco Systems
The Coca-Cola Company
Goldman Sachs
The Home Depot
Johnson & Johnson
JPMorgan Chase
Merck & Co.
Proctor & Gamble
The Travelers Companies
UnitedHealth Group
Walgreens Boots Alliance
The Walt Disney Company
Source: S&P Dow Jones Indices Individual constituents make up the market indexes in the United States, including the Dow Jones Industrial Average, the S&P 500, the Nasdaq Composite Index, and the NYSE Composite Index, among several others, The Dow Jones Industrial Average, for example, consists of shares of thirty large companies. However, Charles Dow created the first index—at that time, it was a simple average of stock prices—in 1884 when he published the Dow Jones Railroad Average, which is today known as the Dow Jones Transportation Average. The Dow Jones Industrial Average (DJIA), also known as the Dow 30, is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange and the NASDAQ.

Constituent

"Contingent shares” refers to shares of stock that would be issued to one or more shareholders provided that certain conditions are met.

The term "contingent shares" refers to shares issued to one or more shareholders provided that certain conditions are met. When contingent shares are released, they increase the total number of shares outstanding, thus decreasing the ownership percentage of all other shareholders. If the contingent shares are conditioned on substantial improvements to the company's performance, then those achievements might far outweigh the dilutive effect of the additional shares being issued. To help bridge the divide between yourself and the seller, you offer Emma $1 million worth of contingent shares in the post-acquisition company, conditional on the company's profits increasing by at least 20% within the twelve months following the acquisition. By offering contingent shares that vest only after certain financial or operational thresholds are reached, shareholders can help ensure the interests of their agents are aligned with their own.

Contingent Shares

A contributed surplus is the excess amount of capital from the issuance of shares above par value, which is recorded in the Shareholders' Equity account.

The contributed surplus is the amount of capital from the issuance of shares above the par value. During the fiscal year, 2017 Cisco issued $708 million of common stock, repurchased $1.05 billion of common stock, repurchased $619 million worth of shares for tax withholdings on vesting of restricted stock units, paid $1.54 billion in share-based compensation and issued $168 million in stock for acquisitions. Initially, a share issuance of common shares will be allocated into two buckets — one for common stock, the other for additional paid-in capital or contributed surplus. The company receives $1.5 million (100,000 shares x $15), $100,000 (100,000 shares x $1) of which is allocated to common stock and the balance of $1.4 million ((100,000 x ($15-$1)) to contributed surplus. Cisco Systems, Inc. had approximately $45.3 billion of common stock and additional paid-in capital as of the of its fiscal year 2017.

What Is Contributed Surplus?

A convertible security is an investment that can be changed into another form, such as convertible preferred stock that converts to common stock. 

A convertible security is an investment that can be changed from its initial form into another form. A convertible security specifies the qualifying terms and price at which it can be converted, and pays a periodic fixed amount (a coupon payment for convertible bonds and a preferred dividend for convertible preferred shares).
A convertible security can be converted from one asset type into another, such as a convertible bond that may be converted into common stock.
The value of the conversion feature of a convertible security is similar to the value of a stock’s call option.
Companies that issue convertible securities will often use call features to maintain some control of the investment.
The performance of convertible securities can be heavily influenced by the underlying stock's price. Compared to investment options that do not have a conversion feature, convertible securities tend to have a lower payout.
Convertible securities usually have a lower payout than comparable securities that do not have the conversion feature. The conversion price, which is the preset price at which the security can be converted into common stock, is usually set at a price higher than the stock's current price. The most common types of convertible securities are convertible bonds and convertible preferred shares, which can be converted into common stock. Conversely, if the stock price is far below the conversion price, the security is likely to trade as a straight bond or preferred share, since the prospects of conversion are viewed as remote.

Convertible Security

Cross-listing is the listing of a company's common shares on a different exchange than its primary and original stock exchange. 

Alibaba Group Launches Hong Kong Initial Public Offering

Cross-listing is the listing of a company's common shares on a different exchange than its primary and original stock exchange. Although the U.S. has traditionally had tougher listing requirements, there was a notable exception in 2014 with the Hong Kong Stock Exchange (HKG).
Alibaba Group Holdings Ltd. (BABA), the Chinese e-commerce behemoth, sought listing on the Hong Kong Stock Exchange but was turned away due to corporate governance practices. For example, companies that are headquartered in developing countries could cross-list on major exchanges in the U.S. or London to enhance the company's image, particularly since the major exchanges have more stringent listing requirements. The term cross-listing is often in reference to foreign-based companies that choose to list their shares on U.S.-based exchanges like the New York Stock Exchange (NYSE). Cross-listing is the listing of a company's common shares on a different exchange than its primary and original stock exchange.

What Is Cross-Listing?

Cum rights allow existing shareholders to buy new shares, typically at a price lower than the current market price.

Shares trading ex-rights have either passed the expiration of the rights offering period, already been exercised by the original holder, or have been transferred to another party (thus making the rights no longer possible to trade). In any of these circumstances, the shares no longer provide the holder any special privileges.
Ex-rights shares are worth less than shares that are still trading cum rights (not yet ex-rights); ex-rights shares do not give a shareholder access to a rights offering. Renounceable rights may trade separately, allowing shareholders to choose to sell their rights rather than exercise them.
XYZ Company has 10 million shares of common stock outstanding and is issuing 5 million additional shares through a rights offering. The following formula calculates the value of one cum right:
> Value = (market price of the stock - subscription price) / (number of rights needed to purchase one share + 1)
The +1 in the denominator adjusts pending a drop in the market price on the ex-date or the first day the stock trades without rights.
Cum rights are subject to NYSE Rule 703.03 and Nasdaq Rules 4310(c) and 4320(e) regarding advance notification periods, proposed subscription prices, expiration dates, and other pertinent information for a shareholder to make a decision. Cum rights may be contrasted with ex-rights, which are shares that no longer have rights attached to them.
Cum rights enable existing shareholders to subscribe to a future offering declared by an issuer. Owners of shares that have cum rights are able to buy new shares in a secondary offering, typically at a price lower than the current market price of the shares in question.

Cum Rights

Cyclical stocks are stocks whose prices are affected by macroeconomic or systematic changes in the overall economy.

A cyclical stock is a stock that's price is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are viewed as more volatile than noncyclical or defensive stocks, which tend to be more stable during periods of economic weakness. Investors seeking long-term growth with managed volatility tend to balance their portfolios with a mix of cyclical stocks and defensive stocks. Cyclical stocks include discretionary companies, such as Starbucks or Nike, while defensive stocks are staples, such as Campbell Soup. The SPDR ETF series offers one of the most popular cyclical ETF investments in the Consumer Discretionary Select Sector Fund (XLY).
The performance of cyclical stocks tend to correlate with the economy.

Cyclical Stock

Decoupling is the occurrence of returns on asset classes diverging from their expected or normal pattern of correlation.

Decoupling is what it's called when the returns of one asset class diverges from their expected or normal pattern of correlation with others. Whereas emerging markets at one point relied on the U.S. economy, many analysts now argue that some emerging markets, such as China, India, Russia, and Brazil, have become sizable markets on their own for goods and services. In the aftermath of the recession, the concept that the world's emerging markets no longer need to depend on U.S. demand to drive economic growth is an example of economic decoupling. For example, in 2017, when Goldman Sachs compared the FAAMG stocks—Facebook, Apple, Amazon, Microsoft, and Google (Alphabet)—to the tech bubble of the late '90s, there was a sell-off that led to a fall in the stock price of most tech companies in the U.S. market. By racking up its foreign exchange reserves and maintaining a current account surplus, the country has room to run a fiscal stimulus if a global downturn occurs, thereby decoupling itself from the advanced markets.

Decoupling

A deferred share does not have any rights to the assets of a company undergoing bankruptcy until all common and preferred shareholders are paid.

A deferred share is a share that does not have any rights to the assets of a company undergoing bankruptcy until all common and preferred shareholders are paid. While both deferred and restricted stocks may be subject to vesting requirements, resulting in a delay before the employee takes full ownership of the associated shares, restricted stocks are immediately converted to unrestricted shares once the period has ended, while deferred shares do not convert until a selected date beyond the vesting date. Deferred shares are usually reserved for company insiders and investors, with various term stipulations about when the shares vest, and may be convertible to either common stock or another class of stock. Deferred shares are mostly used as a method of compensation for executives and founders of a company, or as a means to induce investors to invest in a company. Either way, deferred shares represent a long-term compensation award for company founders, executives, and initial investors.

Deferred Share

A depositary receipt (DR) is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities.

A depositary receipt (DR) is a negotiable certificate issued by a bank representing shares in a foreign company traded on a local stock exchange. The U.S. banks require that the foreign companies provide them with detailed financial information, making it easier for investors to assess the company's financial health compared to a foreign company that only transacts on international exchanges. Depositary receipts allow investors to hold equity shares of foreign companies without the need to trade directly on a foreign market. A depositary receipt allows investors to hold shares in stocks of companies listed on exchanges in foreign countries. For example, when an investor purchases an American depositary receipt, the receipt is listed in U.S. dollars, and a U.S. financial institution overseas holds the actual underlying security rather than by a global institution.

Depositary Receipt (DR)

Distressed securities are financial instruments put out by a company that is near or is currently going through bankruptcy. 

Distressed securities are financial instruments issued by a company that is near to—or currently going through—bankruptcy. A particular security can also be considered distressed if it fails to maintain certain covenants (obligations incorporated into the debt or security, such as the ability to maintain a certain asset to liability ratio, or a particular credit rating.)
As a result of the issuing company's inability to meet its financial obligations, their financial instruments suffer a substantial reduction in value. In many cases, the companies that issue distressed securities end up filing for Chapter 11 or Chapter 7 bankruptcy; as a result, individuals interested in investing in these securities need to consider what happens in the case of bankruptcy. Distressed securities are securities issued by a company that is near to—or in the midst of—bankruptcy. Typically, the anticipated rate of return on a distressed security is more than 1,000 basis points above the rate of return of a so-called risk-free asset, such as a U.S. Treasury bill or Treasury bond.

Distressed Securities

Dividend clientele refers to a group of shareholders that have a common preference for a company’s dividend policy.

Dividend clientele is the name for a group of a company’s stockholders who share a similar view about the company's dividend policy. Sometimes dividend clientele will even go so far as to pressure a company into adopting certain dividend policies, such as pressuring the company to maintain continuity or increase its dividend. Dividend clientele is the name for a group of a company’s stockholders who share a similar view about the company's dividend policy. Dividend clientele is the name for a group of a company’s stockholders who share a similar view about the company's dividend policy. For example, shareholders who depend upon a generous dividend yield for income might pressure the company to maintain continuity, or increase its dividend.

Dividend Clientele

The dividend-adjusted return is a calculation of a stock's return that relies on capital appreciation and also the dividends that shareholders receive.

A dividend-adjusted return is a calculation of a stock's return that relies not only on capital appreciation but also on the dividends that shareholders receive. The dividend-adjusted return is a component of total return, which takes into account both the changes in market value and any other streams of income, such as interest, distributions, and dividends expressed as a percentage (i.e., divided by the share price).
Many investors choose their stocks based on the dividend payout, known as a dividend investment strategy. Dividends lower the value of a stock because profits are distributed to shareholders rather than being invested back into the company, which is believed to be a devaluing of the company and this devaluing is taken into consideration by the reduction in the share price.
When calculating a return on investment, whether that be purely capital appreciation or a dividend-adjusted return, an important component is to determine the value after taxes. If the stock also paid out dividends during the tenure in which they held the stock, then this will need to be added in the return calculation, which is the dividend-adjusted return, which will provide the total return on their investment. A dividend-adjusted return takes into consideration both the appreciation of a stock's price as well as its dividends to arrive at a more accurate valuation of a stock's return.

Dividend-Adjusted Return

The Dow Jones Industrial Average (DJIA) yield is the aggregate dividend yield on the 30 stocks that make up the Dow Jones Industrial Average.

The Dow Jones Industrial Average (DJIA) yield is the aggregate dividend yield on the 30 stocks that make up the Dow Jones Industrial Average (DJIA). The yield will fluctuate as dividends are increased or decreased by the companies within the index, as companies within the index change, as weightings within the index change, and also as the price of the ETF or index changes since a stock's yield is calculated by dividing dividends paid by price. Between 1999 and 2009, the Dow dividend yield has fluctuated from just above 1% in late 1999 to above 4% in early 2009.﻿﻿ Between 2010 and early 2020, the yield stayed largely between 2% and 3%.
When the index moves down substantially, as it did in 2008 and early 2009, this tends to drive up the dividend yield. The DJIA yield will change as the company's within the index change, their weighting within the index changes, the index value changes, or the dividend policy of any of the 30 companies changes. The Dow Jones Industrial Average (DJIA) yield is the aggregate dividend yield on the 30 stocks that make up the Dow Jones Industrial Average (DJIA).

Dow Jones Industrial Average (DJIA) Yield

The Wilshire Mid-Cap Index is a market-capitalization weighted index maintained by Wilshire Indexes.

Wilshire US Style Indexes : Wilshire US Mid-Cap Index

The Dow Jones Wilshire Mid-Cap Index is a mid-cap benchmark index maintained by Wilshire Indexes, launched in 1996. The three other segments are the Wilshire U.S. Large-Cap Index, which includes stocks ranked 1 through 750, the Wilshire U.S. Small-Cap Index, with stocks ranked 751-2,500, and the Wilshire U.S. Micro-Cap Index, with the stocks that are ranked 2,501+. The Wilshire US Mid-Cap Index is a float-adjusted, market capitalization-weighted index of the issues ranked between 500 and 1,000 by market capitalization of the Wilshire 5000 Total Market Index (Wilshire 5000). The Wilshire (formerly Dow-Jones/Wilshire) Mid-Cap Index is a market-capitalization\-weighted index that contains the companies ranked between 500 and 1,000 as measured by market capitalization. The components of the Wilshire US Mid-Cap are the bottom 250 Wilshire US Large-Cap securities and the top 250 Wilshire US Small-Cap securities by capitalization.

Wilshire Mid-Cap Index

The Dow Jones 65 Composite Average is an index comprised of 65 large public companies in the industrial, transportation and utility sectors.

The Dow Jones 65 Composite Average is an index comprised of 65 large public companies in the industrial, transportation, and utility sectors. The index is made up of the 30 stocks that form the Dow Jones Industrial Average (DJIA), 20 stocks that make up the Dow Jones Transportation Average (DJTA), and 15 stocks of the Dow Jones Utility Average (DJUA). The following are some of the companies in each of the three sectors:
**Industrial sector:** Boeing, Caterpillar, Exxon Mobil, Johnson & Johnson (J&J), United Technologies, Walt Disney
**Transportation sector:** American Airlines, Delta Airlines, Landstar System, Norfolk Southern, Southwest Airlines, United Parcel Service (UPS)
**Utility sector:** America Electric Power, American Water Works, Centerpoint Energy, Dominion Resources, Edison International, NextEra Energy Higher-priced stocks exert a greater influence on the index's, or the basket's, overall direction.
To calculate the value of a simple price-weighted index, find the sum of the share prices of the individual companies, and divide by the number of companies. The Dow Jones 65 Composite Average is an index comprised of 65 large public companies in the industrial, transportation, and utility sectors.

Dow Jones 65 Composite Average

The Dow Jones Global Titans 50 Index launched in 1999, consisting of 50 of the largest multinational corporations in the world.

The Dow Jones Global Titans 50 Index selects companies for the index by calculating specific criteria such as each company's free-float market capitalization, revenue, and net income levels. The Dow Jones Global Titans 50 Index is composed of 50 of the largest global companies that generate a sizable portion of their revenue in foreign markets. The highest weighting a constituent can have in the index is 10%.
Since weightings are readjusted quarterly, companies are chosen for inclusion annually.
The Dow Jones Global Titans (DJGT) 50 Index was launched in 1999. The original index—Dow Jones Industrial Average (DJIA)—specifically tracked industrial companies, since they were the major drivers of the economy when the index made its debut.

Dow Jones Global Titans 50 Index

A dual class stock is the issuing of different levels of shares by a single company with distinct voting rights and dividend payments.

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A dual class stock is when a company issues two share classes. Typically insiders are given access to a class of shares that provide greater control and voting rights, while the general public is offered a class of shares with little or no voting rights. The class offered to the general public often has limited or no voting rights, while the class available to founders and executives has more voting power and often provides for majority control of the company. Once shares are listed, companies cannot reverse any voting rights attributed to the new class, or issue any classes of shares with superior voting rights. The New York Stock Exchange (NYSE) banned dual-class structures in 1926 after an outcry over automotive company Dodge Brothers' public offering, which consisted of non-voting shares for the public.

Dual Class Stock

Dual listing refers to a company listing its shares on a second exchange in addition to its primary exchange. 

Dual listing refers to a listing of any security on two or more different exchanges. Companies use dual listing because of its benefits such as additional liquidity, increased access to capital, and the ability for its shares to trade for longer periods if the exchanges on which its shares are listed are in different time zones outweigh the costs of a second listing. Dual listing, also known as interlisting or cross-listing, is attractive to many non-U.S. companies because of the depth of the capital markets in the U.S., the world’s biggest economy. Among the drawbacks is that dual listing is expensive due to the costs involved in the initial listing and ongoing listing expenses. Some exchanges have a number of listing categories for companies that seek a dual listing, each with different requirements and benefits.

Dual Listing

A dummy shareholder is an entity that holds shares in a public company on behalf of another entity. The arrangement may be legitimate, but can be used for fraud.

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A dummy shareholder is an entity that holds shares in a public company on behalf of an individual or firm, the latter being the real or true owner of these shares. A dummy shareholder is an entity that holds shares in a public company on behalf of an individual or firm, the latter being the real or true owner of these shares. The typical industry standard to remedy this issue is to use a dummy shareholder, a dummy director and/or a dummy bank account signatory. A dummy shareholder is an option for offshore companies when an investor located many miles away may not be able to comply with local rules such as a requirement for a minimum amount of shareholders or directors, which may not be available in the investor's team. Dummy shareholders with large blocks of shares can also pose a particular problem when a company's management is trying to fend off a hostile takeover bid since there is little indication of whether these shares are being held in friendly or hostile hands.

Dummy Shareholder  and Functions

An extraordinary general meeting is a way to meet and deal with urgent matters that arise in the downtime between the company's annual shareholders meetings.

An extraordinary general meeting (EGM) is a shareholder meeting called other than a company’s scheduled annual general meeting (AGM). Another difference between an annual general meeting and an extraordinary general meeting is that an annual general meeting can only be held during business hours and not on a national holiday, while an EGM can be carried out on any day including holidays. An extraordinary general meeting (EGM) is a shareholder meeting called other than a company’s scheduled annual general meeting (AGM). An extraordinary general meeting (EGM) refers to any shareholder meeting called by a company other than its scheduled annual meeting. Public companies must file annual proxy statements, known as Form DEF 14A, with the Securities and Exchange Commission (SEC). The filing will specify the date, time, and location of the annual meeting, as well as executive compensation and any material matters of the company concerning shareholder voting and nominated directors.

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