Stock Market 101: Lesson 3 - A Closer Look At Shares
Introduction: After a company becomes publicly traded by issuing shares, it is important to look further into the quantity and type of shares they have issued. The total number of shares that make up a company is reached by adding some different share types. 1) Restricted Shares One type of share is known as a restricted stock, meaning that the share is owned by an insider and has a sale/trade restriction placed on it. Typically the restriction is that the insider must own the stock for a certain amount of time before selling it. In any case, the insider must notify the SEC anytime they sell restricted shares. This notification is made public. If investors see a lot of insider sales happening, they may lose confidence in the company and the stock. 2) The Float The other type of shares are those owned by the public. In other words, those that are available to trade on the stock market. The total number of these shares is known as the float. The size of the float compared to the numb
