Classes of Securities in a Private Offering

What this video covers

• Whether an investor is an owner or a creditor based on the security class described in a scenario
• How equity represents an ownership interest in the issuer, and how that differs from a creditor claim carried by debt
• What a convertible security is (debt or preferred stock exchangeable for equity), and that it is exchanged by surrendering the original instrument
• How a warrant gives the right to purchase equity at a set price within a set period, and that it is exercised with fresh cash and never surrendered
• The critical exam distinction between exchanged (convertible) and exercised (warrant) and how the rules change depending on which applies
• Why a unit is a bundle of two or more classes sold as one instrument, not a sixth standalone class of its own
• How unit components can typically be separated and traded independently after a stated date