Deepika VermaShikha AgrawalMr. Sujeet Pandit

Presented By:-Prachi Tiwari

Variable Income

Securities

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Why common stock called Variable

income securities?

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Common Stock Securities that represent equity ownership Its also give the holder a share in a company's

profits via dividend payments or the capital appreciation of the security

Common stockholders have junior status to the claims of secured/unsecured creditors, bondholders and preferred shareholders in the event of a company's liquidation

Common stock has lower priority in event of liquidation than preferred shares

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Characteristics of Common Stock

the right to receive dividend payments typically from earnings -- if authorized by the board of directors

the power to sell the stock (liquidity rights) and realize capital gains on public trading markets or in private transactions-- if there are willing buyers

the right to receive consideration in a merger or other fundamental transaction -- if approved by the board and the shareholders

the right to vote to elect directors and to approve fundamental transactions (mergers, sale of assets, amendments to articles, dissolutions)

the right to receive a proportionate distribution of assets on corporate liquidation -- if the board and shareholders approve a dissolution

Stock Rights Common stock represents a bundle of rights and powers. They include:

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Types of common stockClassification of Equity Shares Peter Lynch’s Classification

Blue-chip Shares

Growth Shares

Income Shares

Cyclical Shares

Defensive Shares

Speculative Shares

Slow Growers

Stalwarts

Fast Growers

Cyclical

Turnarounds

Assets Plays

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Classification of Equity Shares

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BLUE-CHIP SHARES

Shares of large, well-established, and financially strong companies with an impressive record of earnings and dividends.

GROWTH SHARES

Shares of companies that have a fairly entrenched positions in a growing market and which enjoy an above average rate of growth as well as profitability.

Classification of Equity Shares

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INCOME SHARES

Shares of companies that have fairly stable operations, relatively limited growth opportunities, and high dividend payout ratios.

CYCLICAL SHARES

Shares of companies that have a pronounced cyclicality in their operations.

Classification of Equity Shares

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DEFENSIVE SHARES

Shares of companies that are relatively unaffected by the ups and downs in general business conditions.

SPECULATIVE SHARES

Shares that tend to fluctuate widely because there is a lot of speculative trending in them.

Classification of Equity Shares

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Peter Lynch’s Classification

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SLOW GROWERS

STALWARTS

Large and ageing companies that are excepted to grow slightly faster than the gross national products.

Giant companies that are faster than slow growers but are not agile climbers.

Peter Lynch’s Classification

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FAST GROWERS

CYCLICAL

Small, aggressive new enterprises that grow at 10 to 25 % a year.

Companies whose sales and profit rise and fall in a regular, through not completely predictable, fashion.

Peter Lynch’s Classification

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TURNAROUNDS

ASSETS PLAYS

Companies which are steeped in accumulated losses but which show signs of recovery. Turnarounds company have the potential to make up lost ground quickly.

Companies that have valuable assets which have been somewhat overlooked by the stock market.

Peter Lynch’s Classification

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