1 Once upon a time, when you bought broccoli you bought the whole vegetable, stems and crowns. Then it became customary for grocery store produce departments to separate the crowns from the stems and to sell the crowns at a premium. 2  Iâm not a fan of this practice, because I like both parts of the broccoli plant.
A company's first issue of common stock to the public is called an Initial Public Offering. Afterwards, a corporation may issue new equity at any time in order to finance its growth. When new common shares are offered to existing shareholders first, this is called a rights offering.
Example: Calculate the value of a stock with a multiple-year holdingperiod. An investor plans to hold Newco's stock for 2 years. Newco expects to pay its shareholders common equity, $0.25 per share over the next two years. The investor anticipates Newco's stock will close the end of that time period at $40 per share.