Islamic Equity Markets Quiz

Corporate Capital Structure

• Two components of corporate capital structure: debt and equity

Types of Equity

• Two types of equity offered by most publicly listed companies: common equity and preferred equity

Characteristics of Common Equity

• Offer holders the right to vote at company's annual general meeting
• Holders receive dividends declared by the company
• Holders are entitled to receive a portion of company's assets upon liquidation

Initial Public Offering (IPO)

• Process by which common shares enter the market for the first time: initial public offering (IPO)

Face Value vs Market Value

• Face value: nominal or par value of a share, usually a fixed amount
• Market value: current price of a share in the marketplace

Main Characteristics of Common Equities

• Represent ownership in a company
• Holders have voting rights and potential to receive dividends

Cash Flow Associated with Common Equities

• Primary cash flow: dividends paid to common shareholders

Distinguishing Features of Common Shareholders

• Have voting rights and potential to receive dividends
• Unlike preferred shareholders, common shareholders do not have a fixed rate of return

Face Value vs Market Value (again)

• Face value: nominal or par value of a share, usually a fixed amount
• Market value: current price of a share in the marketplace

Test your knowledge of Islamic equity with this quiz on the valuation and components of Islamic equity markets. Explore the differences between traditional and Islamic finance standpoints and learn about equity screening methodology.