Unit study guide · NISM Series II-B
Introduction to Securities
5 questions in this unit
What this unit covers
- What does an ordinary equity share represent?
- Which payment may an equity investor receive from company profits?
- Why are ordinary equity dividends considered uncertain?
- A bondholder is primarily which type of claimant on the issuer?
- An instrument pays a coupon and may later turn into shares. How is it best described?
Key ideas
From the practice bank · 1
What does an ordinary equity share represent?
Equity shares represent an ownership claim in a company.
Hint Think about who owns part of the business.
II-B-001From the practice bank · 2
Which payment may an equity investor receive from company profits?
Dividends are distributions that a company may declare for shareholders.
Hint Recall the name for profit distributions.
II-B-002From the practice bank · 3
Why are ordinary equity dividends considered uncertain?
Ordinary dividends depend on company decisions and available distributable profits.
Hint Consider whether a shareholder has a fixed-payment contract.
II-B-003From the practice bank · 4
A bondholder is primarily which type of claimant on the issuer?
Bond investors lend to the issuer and become its creditors.
Hint Compare borrowing with share capital.
II-B-004From the practice bank · 5
An instrument pays a coupon and may later turn into shares. How is it best described?
A convertible instrument combines debt-like payments with a right to convert into equity.
Hint Look for a combination of debt and equity features.
II-B-005