Nathaniel Dodson

Companies may require additional capital to cover operational costs, expansions, or any other business activity they want to engage in. Borrowing from lending institutions can be hectic, so some companies opt to advance either through equity offerings or debt offerings. In both these arrangements, a company is getting money, but the payment terms are different. In this article, we’ve discussed equity offerings and debt offerings, highlighting the important aspects of the two and how they differ from each other.

When you hear "purchasing a security," you automatically think of public offerings (this is where people purchase stocks of a publicly held company). Yes, publicly-traded stocks are securities, but they are not the only securities available. The word security has a broad meaning. It encompasses, among a host of other investment vehicles and instruments, stocks, treasury stock, notes, debentures, interests in oil and gas wells, and mineral rights, among others. But how do you know whether something is a security under the Securities Act? The answer is pretty simple, the Howey Test. The Howey test is used to determine, using three elements, whether a product meets the definition of "Security" under federal securities laws. Read on for more insight on this issue.