Study equities for CISI Introduction to Investment, with a UK-specific reading frame built around the official chapter structure and exam weighting.
Equities are one of the most heavily weighted parts of the paper, so this chapter needs more than label recognition. A good answer understands what ownership in a company means, what rights can attach to that ownership, how companies raise further equity, where the shares trade, and how title is ultimately held and settled. The chapter also punishes candidates who lump all share-related language together. Ordinary shares, shareholder rights, rights issues, bonus issues, exchange trading, nominee holding, and settlement all sit in the same broad area, but they answer different exam questions.
| Check | What matters |
|---|---|
| Official topic weighting | 14% |
| Core distinction under pressure | understand the shareholder position from issue to trading to settlement, and distinguish capital-raising events from market trading or custody mechanics. |
| Strongest use of this page | read it before timed sets so you can recognise what kind of question the chapter is asking |
| UK note | Use UK terminology first: FCA, PRA, Bank of England, HMRC, FOS, FSCS, ISA, SIPP, OEIC, unit trust, gilt, and GBP where a sterling amount matters. |
The paper often tests whether you can identify what has changed for the shareholder. Has the company raised new capital, simply re-denominated existing capital, offered a shareholder vote, or changed where and how shares are traded or held? The strongest answer tracks the event back to its effect on ownership, rights, and marketability.
It also tests whether you can separate primary-market activity from secondary-market dealing. A company issuing new shares is not the same as an investor buying listed shares from another investor on an exchange.
| Section | Main exam angle |
|---|---|
| Company formation and shareholder rights | If the stem is about control, voting, or ownership participation, think shareholder rights before market pricing |
| Corporate actions and shareholder events | New capital from existing shareholders usually points to a rights issue |
| Exchanges, indices, and trading venues | An index measures market performance; it does not issue shares or hold assets for a client |
| Holding title, clearing, and settlement | If the question mentions nominee accounts, legal title, or administration, slow down and separate record-keeping from economic ownership |
Start with what an equity investor owns: a residual claim on a company, voting rights where relevant, and exposure to dividends and capital growth without any guarantee. Foundation questions stay practical and usually ask what an ordinary shareholder can expect relative to creditors or other stakeholders.
Rights issues, bonus issues, scrip dividends, takeovers, and similar events change the shareholder experience in different ways. The exam usually rewards recognising the purpose of the event, such as raising capital or redistributing existing value, rather than memorising every procedural detail.
Questions here are usually about where shares trade and how the market is organised. The key distinction is between the company itself, the market venue, and the index measuring part of the market.
This section tests the difference between beneficial ownership, nominee holding, and the post-trade process. Many candidates know the market event but lose marks by missing how title is recorded or how settlement infrastructure works at a foundation level.
A listed company wants to raise additional equity capital while giving existing shareholders the first opportunity to maintain their proportionate ownership. Which corporate action best matches that aim?
Answer: C.
A rights issue raises new equity capital and offers existing shareholders the chance to subscribe in proportion to their current holdings. The other options do not perform that same capital-raising function.