Corporate Issuers Study Notes

The CFA Institute is a global professional organization that offers the Chartered Financial Analyst (CFA) designation.

The CFA Program is a globally recognized professional credentialing program for investment professionals.

The AIMR-PPS® is a performance presentation standards framework developed by the CFA Institute.

The GIPS® are global investment performance standards designed to promote fair and transparent reporting of investment performance.

A copyright covers the rights to reproduce, distribute, and create derivative works from a particular work.

A business structure where a single individual owns and operates the entire business, bearing all the risks and profits.

A business structure involving two or more individuals who share ownership, risks, and profits.

A legal entity separate from its owners, with limited liability, and the ability to raise capital through the issuance of shares.

The way a company is legally formed and structured, affecting its operations and ownership.

Key features of corporate issuers, including their legal identity, separation of ownership and management, limited liability, and ability to raise capital from external sources.

Double taxation occurs when a company's profits are taxed at both the corporate level and the shareholder level. This means that shareholders receive dividends that have already been taxed once.

A tax disadvantage occurs when a business structure leads to a higher overall tax burden compared to other structures. This can be due to different tax rates or the way profits are taxed.

In a limited partnership, profits are passed through directly to the partners and taxed only at the individual level.

A corporation is a legal entity distinct from its owners. The owners, or shareholders, are not personally liable for the corporation's debts.

A high corporate tax rate can incentivize companies to retain profits instead of distributing them as dividends. This is because shareholders would face a higher tax burden on dividend income.

Corporations can distribute profits to shareholders through dividends, which are payments made to shareholders from the company's profits.

The amount of tax disadvantage for a corporation compared to a limited partnership can be calculated by comparing the total taxes paid under each structure.

The amount of tax disadvantage for a corporation compared to a limited partnership can be calculated by comparing the total taxes paid under each structure.

The ability for investors to buy and sell shares of a company quickly and easily on an exchange.

The transparency of share prices on an exchange, allowing investors to track how a company's value changes.

The percentage of a company's shares that are available for trading by the public.

The purchase and sale of shares of a company on an exchange after the initial public offering (IPO).

A market where investors can buy and sell shares of a company directly from one another.

Shareholders in a publicly traded company are able to buy and sell their shares freely on an exchange, making it easier to transfer ownership and raise capital.

Private companies are not required to disclose detailed financial information to the public, protecting their proprietary strategies and information.

Public companies face stringent regulatory requirements from government agencies, such as the Securities and Exchange Commission (SEC) in the US, which impose reporting and transparency obligations.

Private companies may trade their shares on an exchange, but they are not obligated to do so. The decision to trade publicly depends on factors like growth strategy and funding needs.

Public companies need to meet specific listing requirements to be traded on an exchange, ensuring they meet minimum standards for transparency and financial performance.

Private companies typically raise smaller amounts of capital from fewer investors who hold their shares for longer periods.

When a private company goes public, its shares become available for trading in the secondary market.

Private placements allow private companies to sell shares to a select group of investors.

Public companies can also conduct private placements, but they are subject to regulatory constraints from the Securities and Exchange Commission (SEC).

Private placements for private companies are outlined in a legal document, which describes the terms and conditions of the sale.

Both public and private companies can raise money through debt or equity financing.