How the stock market works
Introduction|
Course|
Q&As |
Recommended reading|
Quiz |
18. Conclusion
- Companies come to the stock market in a variety of different ways and for a variety of reasons.
- As a private investor, you can sometimes get an allocation of newly-issued shares, but often the issue will be confined to institutional investors. With internet shares, and the movement towards direct online IPOs, this may change for the better.
- Most of the time you will be trading in a company's ordinary shares on the secondary market.
- Companies issue other types of share - notably preference shares, convertibles, and warrants - and even if you don't own them they may have an effect on your dividend entitlement if they dilute earnings.
- A scrip issue is designed to improve marketability of ordinary shares, and does not dilute your ownership.
- A rights issue is designed to raise more money for the company, and existing shareholders will be invited to buy first. You have a choice about whether to exercise your rights, but if you do not, your ownership may be diluted.
You have now completed the course. To test your knowledge, take the Assessment test.
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