The research carried out on ASX to find the different type of securities being offered on the exchange shows that ASX offers equity shares, preference shares, convertible notes and rights which can be purchased in the market. On the back drop of the different type of securities it is seen that people can trade in all thereby enabling them to create a portfolio with different variety. Also the fact that the characteristics differs gives investor an opportunity to purchase different securities based on time frame, risk, liquidity and so on. The fact that the securities have different procedures of payment in case of winding up and the factors an investor needs to consider while investing throws light on various important factors.
Thus, an investor willing to invest on ASX can on the basis of the following research decide the portfolio and the type of securities he wishes to invest. Companies issue different types of securities based on their requirements. Following are the companies which have issues equity shares, preference shares, convertible notes and rights which can be purchased in the marketWoolworths Limited is an Australian company which functions in the consumer staple industry and has issued equity shares in the public.
It is one of the largest retailer and deals in “liquor, hotels, petrol, consumer electronic, everyday requirements and home improvements”. (Woolworths Website, 2010) The wide range of product and dispersion has made it a huge success. The ASX code for Woolworth is WOW. Australia and New Zealand Banking Group is an Australian bank which functions in the banking industry and have preference shares in the public. It stands fourth in this sector and due to proper services and wide network with banks at all major places have helped it earn a strong customer base.
(Australia and New Zealand Banking Website, 2010) The ASX code for Australia and New Zealand Banking Group is ANZCoretrack Limited is an Australian company which functions in the energy sector industry and has issued convertible notes in the public. Since inception the company has been concentrating on quality and deals in “down whole tools, products and services for the energy industry”. (Coretrack Website, 2010) The ASX code for Coretrack Limited is CKK. Benitec Limited is an Australian company which functions in the pharma sector industry and has issued rights in the public which can be purchased.
Since its inception in 1977 the company has performed in “RNA interface technology which is used for the treatment of RNA virus”. (Benitec Website, 2010) This company based on it develops medicine which is widely used for cancer and neurological diseases. The ASX code for Benitec is BLT. Different securities have different characteristics and risks based on which an investor invests in that particular securities.
The characteristics of equity shares, preference shares, convertible notes and rights are provided belowThe characteristics of equity shares are asEquity shareholders are “owners of the company and have voting rights pertaining to all matter of the company”. (Scott, 2008)The liability of “equity shareholders is limited to the capital contributed by them in the form of share value so their personal belongings cannot be used in case the company goes bankrupt and needs to pay them back”. (Scott, 2008) This thus puts a cap on liabilityThe equity holders have “unlimited right on the profits i. e.
after all the external has been met with whatever remains is the share for the equity holders”. (Scott, 2008) The company pays them by dividend. The company in case of no profits pays nothing thereby still giving an option to the holders to unlimited gains. The holders of equity are “paid at the end in case of liquidation after all the external expenses have been met”. (Scott, 2008) This increases the risk as nothing could be paid if nothing remains after paying the external debt thereby leading to loss of initial investment. The equity shares are “easily tradable and therefore is very liquid”.
(Scott, 2008) A holder can sell his share in the market if he needs money thereby enabling them to get funds easily. The equity holders take risk and could run into losses as there is a chance that the company loses money thereby intensifying the risk associated with the security. Equity shares provide the holders of the instrument a right to get first priority if the company wishes to raise more equity thereby giving them an opportunity to become a major owner (Wills, 2010)