Price and Total Return
Equity Return with No Dividends The total return from holding an equity investment comes from two sources: To measure performance, investors rely on current and past share prices, adjusting for events such as stock splits or reverse splits. Returns can…
The Dividend Payment Process
Dividend Payment Timeline The process of distributing regular cash dividends to common shareholders follows a structured sequence that allows time for proposals, shareholder verification, and vote collection. While the exact timing differs across companies and jurisdictions, the order of events…
Features and Uses of Dividends, Share Repurchases, Stock Splits, and Reverse Stock Splits
Dividends and Their Characteristics Dividend announcements often convey management’s expectations: This explains why companies are highly reluctant to cut dividends—doing so often triggers significant stock price declines as investors reinterpret the company’s prospects. Shareholders, as partial owners of a company,…
Equity Voting Process
The Shareholder Voting Process Overview Shareholders of publicly listed corporations vote on important company matters at annual general meetings or special shareholder meetings. Voting items include both management proposals and shareholder proposals. Management proposals typically include: Master CFA Level I…
Economic vs. Voting Rights
Direct Investing vs. Indirect Investing Direct investing occurs when an investor purchases foreign equity securities directly in the issuer’s domestic market. This approach requires establishing local securities and cash accounts, navigating foreign trading rules, clearing procedures, settlement systems, tax regulations,…
Reading 36 – Market Organization and Structure – LOS 36a: explain the main functions of the financial system – LOS 36b: describe classifications of assets and markets – LOS 36c: describe the major types of securities, currencies, contracts, commodities, and…
Equity Instrument Features
Publicly Listed versus Private Equity Securities The vast majority of corporations in any developed economy are privately held. In the United States, for instance, private firms outnumber publicly traded firms by approximately 1,000 to 1, with publicly listed companies representing…
Equity Instrument Features
Nature and Purpose of Equity Instruments Equity instruments represent an ownership stake in a corporation. Unlike debt, which creates a creditor relationship with contractual rights to interest and principal repayment, equity gives the holder a residual claim on the company’s…
Guidance for Standards
I. Professionalism Standard I: Professionalism establishes expectations for ethical and professional behavior. It requires members and candidates to act in a manner that protects the integrity of the investment profession, follows applicable requirements, maintains independence, communicates accurately, avoids misconduct, and…
Older Curriculums
Study Session 1 Reading 1 (56 in 2022) – Ethics and Trust in the Investment Profession Read our in-depth summary of Ethics and Trust in the Investment Profession – LOS 1a: explain ethics – LOS 1b: describe the role of a…
