Types of Securities
The most heavily weighted technical topic: the features and risks of equity securities, debt instruments, pooled funds and derivatives, plus margin financing and stock borrowing and lending.
Equity, debt, funds and derivatives
Ordinary shares confer ownership, votes and variable dividends and rank last on winding up; preference shares usually pay a fixed dividend and rank ahead of ordinary shares but have limited votes. Warrants give the right to subscribe for shares at a set price. ETFs are exchange-traded pooled funds that typically track an index, and REITs hold income-producing property and distribute most of their income. Bonds pay fixed coupons and their prices move inversely to interest rates; commercial paper is short-term unsecured company debt. Options and other derivatives derive value from an underlying asset, and margin financing leverages positions, magnifying gains and losses.