Equity-security features, market structure, and portfolio trade-offs versus managed products.
This chapter examines equity securities as investments, not merely as legal claims. It begins by comparing direct equity ownership with managed products, then explains the main characteristics of equity securities, the structure of Canadian and U.S. equity markets, and several additional issues that affect equity investing in practice.
For exam purposes, the chapter is especially important because equity questions often combine product knowledge with suitability, liquidity, market structure, and behavioural considerations. Students should be able to identify not only what a stock is, but also when direct equity ownership is or is not the strongest fit for a portfolio.
What This Chapter Covers
direct equity ownership versus managed-product exposure
common and preferred shares, dividends, rights, valuation concepts, and governance
Canadian and U.S. market structure and cross-border investing issues
corporate actions, primary and secondary markets, short selling, margin, and insider trading
How To Study This Chapter
Read the pages as a progression from product choice to market structure and then to implementation risk. In most exam questions, the strongest answer is the one that links the equity decision back to the investor’s objective, horizon, diversification needs, and control of downside risk.
Exam Focus
Be ready to distinguish ownership from pooled exposure, common from preferred shares, exchange structure from issuer characteristics, and legitimate equity strategy from speculative misuse of leverage or inside information.