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Equities & Options
Understanding Equities
Shares of Common Stock or an "equity share" of a corporation represents a share of owernship in a company. The price of a stock generally represents investor expectations about the future profitability potential or future value of the company, and may also be influenced by general economic and market conditions. Stocks are not FDIC-insured and involve risk, including possible loss of the amount invested.
When buying stock, an investor is typically hoping that the perceived value of the company will rise, producing a capital gain when the shares are resold at a higher price.
A dividend is a payment distributed to shareholders from time to time and in amounts voted on by a company's (or a mutual fund's) board of directors. The dividend may be paid in cash, in more shares of the company's stock or in shares of another company. Not all corporations pay dividends.
Types of Stocks
- Large-capitalization Stocks — those of large and established U.S. companies — are found in the S&P 500 or Dow Jones Industrial Average
- Small Capitalization Stocks — stocks of small U.S. companies — are in the NASDAQ Composite or 2000 and tend to involve more risk than Large-Cap Stocks
- International Stocks — stocks of companies based outside the U.S. — are traded as American Depository Receipts (ADRS). Each ADR represents one or more shares of foreign stock or a fraction of the share. By owning an ADR, you have the right to obtain the foreign stock it represents. The price of an ADR corresponds to the price of the foreign stock in its home market, adjusted to the ratio of the ADRS to foreign company shares
- Blue Chip Stocks — have histories of profit growth and divided payment. They are usually high-priced and low-yielding
- Growth Stocks — earnings and/or revenue grow faster than their industry or the overall market. These companies most likely will provide long-term capital growth, but the stocks may be more volatile than the market as a whole. A growth stock is not a growth stock forever
For more information, please contact your Financial Advisor.