Video: Introduction to Equity Securities

In this lesson, Nick Palazzolo, CPA, demystifies the world of equity securities by explaining what they are and the rights they confer to owners, such as sharing in the profits and losses of a company. He illustrates this concept by taking a practical approach, using the example of purchasing a share through a brokerage to represent partial ownership in a well-known company. Nick further delves into the types of financial instruments that are considered equity securities, such as common and convertible stocks, and clarifies which securities are classified as equity only upon conversion or redemption. He also sheds light on how the degree of ownership affects the accounting treatment for these investments.