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Chapter 13: 12Q (page 658)

Identify and explain the different types of classifications for investments in equity securities.

Short Answer

Expert verified

Equity Securities have three types of investment. These are:

a. Holding less than 20% shares

b. Holding between 20% to 50% shares

c. Holding more than 50% shares

Step by step solution

01

Definition of equity securities

Equity securities are securities that show the ownership status of the company. Equity securities holders are the real owners of the company.

02

Classification of equity securities

These are the three types of investment in equity securities:

1. Holding less than 20% shares:

In this type of investment, shareholders do not participate in the active management of the company.

2. Holding Between 20% to 50% shares:

In this type of investment, shareholders take part in the management of the company.

3. Holding more than 50%:

Shareholders of this type of investment are known as the owner of the company. This person controls the company.

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