Equity Securities CERTIFICATION PAPER
2026 FULL SOLUTION GRADED A+
● Issuer. Answer: Entity that creates and sells securities to raise capital
● Primary market. Answer: Market where securities are sold for the first
time (IPO, new issues)
● Secondary market. Answer: Market where existing securities are
traded between investors
● Public offering. Answer: Sale of securities to the general public
● Private placement. Answer: Sale of securities to a limited number of
qualified investors
● Underwriter. Answer: Investment bank that helps issue and distribute
new securities
● Broker-dealer (BD). Answer: Firm in the business of buying and
selling securities for clients or its own account
, ● Common stock. Answer: Equity security representing ownership in a
corporation
● Shareholder. Answer: Owner of common stock
● Voting rights. Answer: Right of shareholders to vote on corporate
matters
● Proxy. Answer: Authorization allowing someone else to vote a
shareholder's shares
● Capital appreciation. Answer: Increase in stock value over time
● Dividends. Answer: Distribution of company earnings to shareholders
● Residual claim. Answer: Common shareholders are paid last in
liquidation
● Limited liability. Answer: Shareholders can only lose the amount
invested
● Par value. Answer: Nominal value of a stock with no market
relevance
2026 FULL SOLUTION GRADED A+
● Issuer. Answer: Entity that creates and sells securities to raise capital
● Primary market. Answer: Market where securities are sold for the first
time (IPO, new issues)
● Secondary market. Answer: Market where existing securities are
traded between investors
● Public offering. Answer: Sale of securities to the general public
● Private placement. Answer: Sale of securities to a limited number of
qualified investors
● Underwriter. Answer: Investment bank that helps issue and distribute
new securities
● Broker-dealer (BD). Answer: Firm in the business of buying and
selling securities for clients or its own account
, ● Common stock. Answer: Equity security representing ownership in a
corporation
● Shareholder. Answer: Owner of common stock
● Voting rights. Answer: Right of shareholders to vote on corporate
matters
● Proxy. Answer: Authorization allowing someone else to vote a
shareholder's shares
● Capital appreciation. Answer: Increase in stock value over time
● Dividends. Answer: Distribution of company earnings to shareholders
● Residual claim. Answer: Common shareholders are paid last in
liquidation
● Limited liability. Answer: Shareholders can only lose the amount
invested
● Par value. Answer: Nominal value of a stock with no market
relevance
