The work of the Stock Exchange

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Monograph

Identifikator:: 1831284952

URN:: urn:nbn:de:zbw-retromon-225876

Document type:: Monograph

Author:: Meeker, James Edward http://d-nb.info/gnd/126597340

Title:: The work of the Stock Exchange

Edition:: Revised edition

Place of publication:: New York

Publisher:: The Ronald Press Company

Year of publication:: [1930]

Scope:: XVI, 720 Seiten; Illustrationen, Diagramme

Digitisation:: 2022

Collection:: Economics Books

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Chapter I. The evolution of securities

Collection:: Economics Books

22 THE WORK OF THE STOCK EXCHANGE perpetual in character, and represents the equities of the com- pany as far as these are not subject to bonds, preferred stocks or other senior securities. In order that a stock issue may be conveniently dealt in, it is divided into a definite number of equal shares. The actual market value of the given share at any given time will depend upon its proportionate claim to dividends paid and net earnings obtained, and to the equities of the company, rather than to any nominal or par value which may be assigned to the share. As a convenience to dealings, common stock issues will sometimes be “split up” into a greater number of shares by allowing the holder of “old shares” to exchange them according to a stated ratio for “new shares.” This of course usually occurs in the case of very prosperous concerns, the price of whose shares has become inconveniently high. The reverse process is sometimes followed with com- panies whose shares have fallen to low levels, and here a fewer rather than a greater number of “new shares” will be obtained in exchange for the “old shares”; such exchanges are often made in the course of serious corporate reorganizations. “Rights.”—Corporations sometimes find it possible and desirable to obtain additional capital through the sale of addi- tional amounts of common stock. This is usually done by giv- ing existing common stockholders a privilege or “right” to subscribe to the new stock in proportion to their several hold- ings of the existing stock. In case a company with 1,000,000 shares of common stock decided to issue 100,000 additional common shares, the holder of, say, 100 shares would thus obtain the right to buy 10 new shares at a “ratio of 10 to 1.” The price at which an old shareholder can subscribe to new stock in this way must of course be fixed. Naturally, if a “right” is to possess any market value, this subscription price must be less than the existing market price.® The period dur- ing which such a “right” may be exercised depends of course on the circumstances in each case, but it is often sufficiently 8 Appendix Ie.

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